Protecting Leaseholder Rights: Understanding Derogation from Grant and Quiet Enjoyment

In this article, Farouk Vahdati, from our Litigation and Resolution team, delves into the complex domain of tenants' rights, highlighting two important aspects: 'Derogation from Grant' and 'Quiet Enjoyment'.

Farouk explains the meaning of these rights and illuminates the potential entitlements for tenants when they are breached. Through real-world case studies, he'll demonstrate how these legal principles unfold in practical situations, offering invaluable insights for tenants facing similar challenges.

Derogation from Grant explained

Certain legal principles safeguard the rights of both parties in landlord and tenant relationships. One such principle, known as "derogation from grant," underscores the understanding that when a landlord grants certain benefits to a tenant, they shouldn't subsequently undermine or remove those benefits.

This principle is rooted in the concept of fairness and applies broadly to both commercial and residential leases. It's an implicit obligation within leases designed to prevent landlords from taking actions that could render the property unsuitable for its intended purpose.

Lease agreements outline the responsibilities tenants must adhere to and the rights granted to them. These rights, such as access to parking spaces or designated refuse areas, are meant to enhance the tenant's occupancy experience. Should the landlord impede upon these rights (like blocking access to a parking space), it constitutes a derogation from the lease.

Although many leases might not explicitly mention this obligation, it remains an implied term of the lease.

Derogation from grant issues can arise not only between landlords and tenants but also among neighbouring landowners. For instance, if one landowner obstructs a right of way granted to another, it constitutes derogation from grant.

Derogation from Grant: The case of Carter v Coles [2006] EWCA Civ 398

The case of Carter v Coles [2006] EWCA Civ 398 exemplifies a situation where neighbouring landowners breached a grant agreement. The Carters sold a portion of their land to the Coles while retaining another part leased to a water bottling company. They secured an explicit right of way over the sold land for lorry access to the bottling plant. The business's planning permission mandated a clear visibility splay, which was intact at the time of sale. However, during their ownership, the Coles planted shrubs and installed a fence on the visibility splay, obstructing it.

Consequently, the Local Authority declined to renew the planning permission, leading to the departure of the commercial tenants who could not operate without it. The Court determined that Coles' actions constituted derogation from grant, as the planted shrubs and fence effectively impeded the easement's use.

Quiet Enjoyment explained

Quiet Enjoyment, an implied term in every tenancy, ensures that tenants have the right to peacefully possess and occupy their property without undue interference from the landlord.

Contrary to common misconception, it doesn't solely refer to noise levels but encompasses various forms of interference, such as flooding, utility disruptions, obstruction of access, or intimidation tactics to force the tenant out.

The term "substantial interference" will vary depending on the facts of the case; however, it can include the following:

• Flooding caused by water from a landlord's neighbouring property, which damages the leaseholder's property.
• Interfering with utilities such as gas and electric, which serve the leaseholder's property.
• Significant obstruction of access to the leaseholder's property (for example, because of building works or demolition).
• Putting the leaseholder in fear and intimidating them, whether verbally or in writing, to force or coerce them out of the premises.

Quiet Enjoyment: The case of Timothy Taylor Ltd v Mayfair House Corporation & Another [2016] EWHC 1075

In the case of Timothy Taylor Ltd v Mayfair House Corporation & Another [2016] EWHC 1075, a landlord's actions disrupted a leaseholder's right to quiet Enjoyment. The dispute arose between a tenant running an art gallery in Mayfair and their landlord regarding building works on the premises. Although the tenant acknowledged the landlord's right to carry out necessary works, they argued that the manner in which the works were conducted was unreasonable and infringed upon their lease rights.

The landlord undertook extensive rebuilding of the building, including erecting scaffolding that obscured the gallery's visibility. Despite an agreement to configure the scaffolding to maintain the gallery's visibility, this was not followed through. Additionally, the noise from the works further impacted the tenant's ability to operate.

As a result, the tenant sought damages for breaches of their right to Quiet Enjoyment and requested an injunction to remove the scaffolding and noise reduction measures. The Court ruled in favour of the tenant, finding that the landlord's actions breached the covenant of Quiet Enjoyment by failing to reasonably exercise their right to build, ultimately diminishing the tenant's ability to fully utilise the leased premises.

What remedies are available?

When either derogation from grant or breach of Quiet Enjoyment occurs, affected parties may seek remedies through the County Court, including damages or injunctions.

Seeking guidance from legal experts specialising in litigation is crucial before initiating legal proceedings. If you need assistance regarding derogation from grant or breaches of quiet Enjoyment, don't hesitate to contact our Litigation team at 023 8071 7407 or via email at faroukvahdati@warnergoodman.co.uk.