The right of a lessee under a commercial lease to quiet enjoyment is implied in the majority of leases. The implied covenant is a limited guarantee that the lessee can occupy the premises without interruption or disturbance from the lessor, or persons through whom the lessor derives title or persons who claim through the lessor.
This is not a guarantee against the conduct of all persons. It would not be appropriate for the lessor to be responsible for everything e.g. for a neighbouring owner. The difficulty for Christchurch lessees in the red zone is that access is impeded but it is not a claim through the lessor and so using a quiet enjoyment claim is problematic.
Where a lessor might be able to impact activities outside the boundary of the premises (e.g. because they are that neighbouring owner!) a lessor is well advised to consider whether there are some limits which should be put on that right to quiet enjoyment.
It is theoretically possible to make the lessee’s quiet enjoyment conditional on the lessee complying with the covenants in the lease. Commentary suggests the wording in the ADLS precedent deed of lease does not achieve this. So a quiet enjoyment claim from a lessee under an ADLS lease might succeed regardless of whether the rent is up to date.
The lessee’s remedy if quiet enjoyment is breached is a damages claim. Punitive or exemplary damages might be available in extreme cases or for mental distress, anxiety and inconvenience. If damages are not an adequate remedy and the activity is threatened or continuing an injunction might be available.
The types of conduct that can constitute a breach of the covenant for quiet enjoyment include:
- Removing or disconnecting services such as water, gas and electricity
- Water leaking from a broken pipe in the lessor’s building into the premises
- Interference with the premises e.g. removing windows, demolishing the building in which the premises are located
- Closing a door which stopped the flow of air in and out of leased premises causing the stored pumpkin crop to rot
- Inteference with access to the leased premises e.g. erecting scaffolding or hoardings, closing lifts or a common foyer
- Physical interference or damage to the leased premises by the lessor e.g. failing to maintain or repair the roof
- Re-entering without following the proper process
- Leasing to a brothel forcing a commercial tenant to associate with it because of a shared stairway and foyer and causing noises and smells to interfere with the commercial offices
- Undertaking earthquake strengthening work forcing the closure of a restaurant business on the ground floor
The last case especially may need some thought if lessors have earthquake strengthening work to do (Fujiyama Teppanyaki Japanese Restaurant Limited v Morgan (2003)). The lease in that case did permit the lessor to undertake the works but an injunction was still granted stopping the work.
