Understanding the Right to Quiet Enjoyment in Commercial and Retail Leases

Introduction

While many are aware that tenants of a commercial or retail lease are entitled to the right of quiet enjoyment, most tenants and landlords are unaware of what this right entails.

Most commercial and retail leases contain an express provision that grants a tenant a right of quiet enjoyment. At a high level, this right allows the tenant to use and enjoy the premises for the purposes outlined in the lease without unreasonable interference from the landlord, its agents or any other party that may hold an interest in the premises.

However, even where the lease does not include an express clause outlining the right to quiet enjoyment, this right is commonly implied.

The extra nature of this right is governed by the terms of the lease, although there is significant case law that dictates what constitutes “quiet enjoyment” and what remedies are available when this right is breached.

This article will explore what constitutes “quiet enjoyment” and some of the relevant case law in the area.

What is Quiet Enjoyment?

A landlord must ensure that a tenant can have quiet enjoyment of the premises. The right to quiet enjoyment can vary on the exact wording of the lease, noting that these clauses tend to be broad and conditional upon the tenant complying with their obligations under the lease.

The right to quiet enjoyment can prevent landlords from:

1. Preventing access to the premises whether that be through scaffolding hindering entry or stopping/disabling lifts;
2. Conducting works that cause significant disruption to the tenant and its business; and
3. Failing to conduct necessary works that prevent the tenant from enjoying or using the premises (i.e. a leaking roof).

As a result, if a landlord’s conduct or their inaction (i.e. failing to conduct works etc) disrupts a tenant’s business or their right to use the premises, the landlord could be in breach of the lease and the tenant may take action.

There are, however, limits to the right to quiet enjoyment. For example, a landlord must be allowed to conduct structural repairs or other repairs required under the lease. It may be that under the specific lease, a landlord needs to provide notice of these works to the tenant to mitigate any impact on the tenants right to quiet enjoyment. It is always recommended when negotiating a lease to include provisions regarding notice periods for things such as landlord works to ensure tenants and their right to quiet enjoyment is not adversely impacted.

Case Law

There is significant case law in relation to a tenant’s right to quiet enjoyment. This is particularly relevant where the lease does not stipulate a specific remedy for when the right to quiet enjoyment is breached.

At a high level, courts have held that if a landlord (or their agents) cause significant disruption or interference to a tenant and their use of the premises and the landlord has not taken reasonable steps to mitigate or minimise this disruption, a tenant may be entitled to:

1. Damages including for loss of income or business opportunity;
2. A rent-free period;
3. An injunction to prevent the interference (such as landlord works); or
4. In serious cases, termination of the lease.

It must be noted that termination of the lease is only an available remedy where the landlord is unable to compensate a tenant properly or if the disruption to the tenant’s right to quiet enjoyment is indefinite.

Telex (Australasia) Pty Ltd v Thomas Cook & Son (Australasia) Pty Ltd (1970)

In this case, the landlord’s building works caused noise and vibrations that significantly interfered with the tenant’s use of the premises to sell and test hearing aids. As a result, the tenant was forced to vacate. The court found that the landlord breached the tenant’s right to quiet enjoyment and awarded damages for loss of profits.

Telstra Corporation Ltd v Sicard Pty Ltd (2009)

Here, the landlord carried out works to the façade of the premises that generated noise, dust and vibration that interfered with Telstra’s ability to operate a call centre. The tenant was granted an interlocutory injunction. This injunction required the landlord to conduct the works during restricted hours to minimise the disruption to the business.  

These cases demonstrate how courts have interpreted and enforced the right to quiet enjoyment.

Conclusion

The right to quiet enjoyment is a fundamental principle for tenants under commercial and retail leases, so much so, that this provision is often implied into leases where it is not explicitly included. This right ensures that tenants can occupy and use the premises for its intended purpose without unreasonable interference from the landlord or others acting on the landlord’s behalf.

While the scope of this right may vary depending on the lease and the specific circumstances, landlords must be aware of their obligation to provide the right of quiet enjoyment to its tenants.

For tenants, it is integral to have a well drafted right to quiet enjoyment clause in a lease. Ideally, the lease should also include provisions requiring the landlord to provide notice of any potential disturbances that may impact a tenant’s right to quiet enjoyment. These clauses can assist should any dispute arise.

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