Two of the most important legal concepts in a commercial property lease are "quiet enjoyment" and "derogation from grant."

02 Feb Quiet enjoyment and derogation from grant

Posted at 00:00h in Commercial Property Law by

What is ‘quiet enjoyment’ and ‘derogation from grant’ in a commercial property lease?

When it comes to commercial property leases, there are a few key legal concepts that landlords and tenants should be aware of.

Two of the most important legal concepts in a commercial property lease are “quiet enjoyment” and “derogation from grant.” HRJ Foreman Laws Solicitors takes a closer look at what these concepts mean, and how they can affect landlords and tenants.

‘Quiet enjoyment’ concept in a commercial lease

First, let’s talk about ‘quiet enjoyment’. Most leases will contain an express covenant by the landlord to provide quiet enjoyment. This covenant is often misunderstood – it doesn’t mean that the landlord must ensure that the property is quiet, nor does it mean that the landlord has to somehow ensure that the tenants are able to enjoy themselves. Instead, it means that the tenant must be able to “enjoy” (i.e. occupy) the property without interruption from the landlord (or their agent). This can include things like the landlord unreasonably requiring access to the tenant’s property or undertaking works that cause a nuisance to the tenant (not restricted to noise nuisance).

‘Quiet enjoyment’ breach

It’s important to note that for a breach of quiet enjoyment to be shown, the tenant must satisfy the court that the conduct of the landlord causes “substantial interference” and is something significantly more than a mere nuisance or inconvenience. Factors that may amount to a breach of quiet enjoyment include: the landlord or their agents/contractors demanding access without prior appointment or reasonable notice, physical interference with the property, or harassment from the landlord.

Examples of ‘quiet enjoyment’ breach

Cases where this principle has been examined include “Sidaway v Bethlem Royal Hospital Governor” [1985] 1 AC 871, where the court found that the landlord’s conduct of entering the property without notice, making excessive noise and causing disruption, amounted to a breach of quiet enjoyment and “Methuen v Harper” [1995] 1 EGLR 102, where the court found that the landlord’s conduct of entering the property without notice, making excessive noise and causing disruption, amounted to a breach of quiet enjoyment.

‘Derogation from grant’ concept in a commercial lease

This concept is closely related to ‘quiet enjoyment’. It means that if one party (A) agrees to give a benefit to the other (B), then it (A) should not do anything that substantially deprives (B) of the enjoyment of that benefit.  Nor can (A) then later remove that benefit from (B).

It protects the party who, having relied upon the promise made, is entitled to expect that promise to be fulfilled. An example of this would be where a tenant takes the lease on the promise by the landlord that he can access land across neighbouring land, and the landlord later prevents access against that promise.

Examples of ‘derogation from grant’ breach

Cases where this principle has been examined include “Routledge v Grant” [1828] 1 Bing NC 124, where the court found the landlord had derogated from grant by blocking a path the tenant was granted right of access to, and “Harding v Wealands” [1897] 1 Ch. 681, where the court held the landlord had derogated from grant by blocking a right of way the tenant was granted access to.

Referring to ‘quiet enjoyment’ and ‘derogate from grant’ in a lease

 It’s worth noting that while most leases will contain an express covenant by the landlord to provide ‘quiet enjoyment’. But where such a provision is not expressed, it is in any event implied into the lease. Similarly, there is a related obligation on a landlord not to ‘derogate from grant’, although it is rare to find an express provision to that effect in most leases, it is also implied.

It’s important for landlords and tenants to understand these concepts and the potential implications they could have on their lease agreement.

For landlords, it’s crucial to understand that they cannot remove a benefit that they had previously promised to the tenant without facing legal repercussions. This means that landlords should be careful when making promises to tenants and must ensure that they can keep those promises.

For tenants, it’s important to understand that they have the right to peaceful possession and use of the leased property without interference from the landlord or any other party. If a tenant feels that their quiet enjoyment is being disrupted, they should take legal action to protect their rights.

What to do in the event of a breach

In addition to understanding the legal concepts of ‘quiet enjoyment’ and ‘derogation from grant’, landlords and tenants should also be aware of the potential legal remedies available to them in the event of a breach.

For a breach of ‘quiet enjoyment’, a tenant may seek damages or an injunction, which is a court order requiring the landlord to stop a particular action or behaviour that is causing a breach of the covenant. In some cases, a tenant may also be able to terminate the lease if the breach of ‘quiet enjoyment’ is severe enough.

Similarly, for a breach of the covenant not to be a ‘derogation from grant’, a tenant may seek damages or an injunction. In some cases, a tenant may also be able to terminate the lease if the breach is severe enough.

It’s worth noting that the legal remedies available to the tenant will depend on the specific circumstances of the case and the specific provisions of the lease agreement.

It’s also important for landlords and tenants to be aware of the limitations of these legal concepts. For example, a landlord may not be in breach of ‘quiet enjoyment’ if the tenant is causing the disturbance or nuisance. Or if the disturbance or nuisance is caused by a third party outside of the landlord’s control.  Similarly, a landlord may not be in breach of the covenant not to ‘derogate from grant’ if the tenant has been given notice of the landlord’s intention to remove the benefit in question.  Or if the removal of the benefit is necessary for the landlord to carry out necessary repairs or improvements to the property.

In conclusion

‘Quiet enjoyment’ and ‘derogation from grant’ are important legal concepts that landlords and tenants should be aware of when entering into a commercial property lease. Both concepts serve to protect the rights of tenants and ensure that landlords fulfill the promises they make to tenants.

Landlords and tenants should be aware of the potential legal remedies available to them in the event of a breach, and should understand the limitations of these concepts.

For more information about commercial leases contact our Commercial Property Legal Team today.

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