Quiet enjoyment landlord did act reasonably

In this appeal Mr Justice Nugee considered whether the judge at first instance had been right to take into account the Landlord’s waiver of rent when determining whether it had breached its covenant to permit the Tenant quiet enjoyment of the Premises. He did not overturn the judge at first instance’s decision. He also considered the basis on which an appellate court might overturn the findings of fact made by a first instance judge (Jafari v Tareem Ltd [2019] 10 WLUK 409).

Background

The Tenant, Dr Jafari, operated his dental practice from the Premises in Brighton. His lease contained a covenant for quiet enjoyment (in a standard form) and had 10 years left to run in 2012.

In 2012 the Landlord, Tareem, began redeveloping the remainder of the building in which the Premises were located, to turn it into a 134 room hotel. Scaffolding was put up and the works began in mid-April 2012. The scaffolding was taken down in August 2013 and practical completion was achieved on 5 November 2013.

Tareem had waived the rent for the period of the works (7 quarters from March 2012 to December 2013). However, Dr Jafari alleged that the works had caused a significant downturn in the profitability of his practice and withheld rent thereafter.

Tareem brought proceedings for the outstanding rent and Dr Jafari counterclaimed for breach of the quiet enjoyment covenant and for nuisance.

The County Court decision

Although there was some evidence that noisy works had been carried out outside of agreed hours, and no account had been given to Dr Jafari’s practice when the scaffolding was put up, the judge, in consideration of the rent waived, held that Tareem “did take all reasonable steps to minimise the disturbance to Dr Jafari”.

The judge ordered that Dr Jafari pay his outstanding rent to Tareem (£79,279.14).

For the counterclaim, Dr Jafari was awarded £77,984.24, being made up of 15% of the rental value for the relevant period (£10,875), and damages for the repairs carried out (under £2,000) and not carried out (£64 – £65,000) by Tareem.

Dr Jafari was also ordered to pay 80% of the costs of the Claim and Counterclaim.

The Appeal

There were 7 grounds of appeal (grounds 3 - 7 concerned the facts and 1 - 2 points of law) which Nugee considered in the following order:

Ground 5 – considered the extent to which Tareem’s contractors kept to the arrangement that noisy works would take place in the restricted hours.

The judge had found that in general (but not always) the restricted hours were adhered to. Whilst issues were raised at appeal regarding Tareem’s “shifting position” in its pleadings and with its witness evidence, Nugee considered these matters for the trial judge to contemplate when reaching his decision. He held that “what needs to be shown on appeal against findings of primary fact is either that there was literally no evidence to support a conclusion or that a decision under appeal is one that no reasonable judge could have reached because it was rationally insupportable”, and concluded that these hurdles were not met.

Ground 6 – considered whether Tareem’s works caused Dr Jafari a loss of profits.

Whilst Dr Jafari’s accounts did show a decline in profits in 2014, the judge decided that this was not as a consequence of the works. Nugee held that the judge did not have to decide what the cause of the decline was but only that the works were not the cause. He was wholly unpersuaded that this was a conclusion not open to the judge to make.

Ground 7 – considered the claim for loss of amenity.

Counsel for Dr Jafari argued that the sum awarded was too low (15% of the rent for the period) and, given the impact on Dr Jafari’s occupation, it should not have been tied to a percentage of the passing rent (which was comparatively low). Nugee confirmed that whilst an award for damages for loss of amenity did not need to be linked to a percentage of the rent, it was not wrong in principle to do so. As for the percentage awarded, he did not think this was outside the level permissible to be awarded based on the facts of this case, which he considered to be between 10% and 25%.

Ground 3 & 4 – considered the weight given by the judge to the waiver of rent and whether he had reached a decision no reasonable judge could have reached on the evidence.

Dr Jafari’s Counsel argued that the judge had failed to take into account his own findings in relation to the scaffolding and noisy works, thereby betraying a lack of consistency when reaching his decision. Nugee did not agree. He noted that the judge had acknowledged that things could have been done better from Dr Jafari’s standpoint but that the waiver of rent offered made reasonable that which would or might have been unreasonable. Although it was arguable that the judge may not have given as much weight as he might have done to the other issues, Nugee said that this could not be equated to “a logical flaw or lack of consistency”. Therefore, he could not conclude that the decision was one no reasonable judge could have come to.

Ground 1 & 2 – considered whether the judge should have taken into account the waiver of rent when considering reasonableness.

This was held to be a moot point upon which Nugee did not express a view. He stated that even if Counsel for Dr Jafari was correct, and the waiver of rent should not have been considered when determining reasonableness, the judge would ultimately have come to the same overall conclusion. That conclusion being that the waiver of rent was adequate compensation for the disturbance suffered by Dr Jafari. Accordingly, he considered that no further damages would have been awarded.