The Meaning of ‘Quiet Enjoyment’ in a Lease

An essential component of a lease is that the tenant have ‘quiet enjoyment’ of the leased premises. The concept of ‘quiet enjoyment’ distinguishes leases from licence agreements. While most commercial leases include a specific provision granting the tenant ‘quiet enjoyment’, the right is in any event implied by law.

The concept of ‘quiet enjoyment’ requires that a landlord must not only ensure that the tenant has the right to use and occupy the premises, but also to enjoy that use without substantial interference from the landlord or any other party claiming an interest in the premises.

The Courts have held that whether interference from a landlord is substantial or not is a question of fact having regard to a tenant’s specific use of the premises. The business conducted from the premises by the tenant forms the framework of the analysis as to whether there has been interference by the landlord to an extent to be considered a breach of the ‘quiet enjoyment’ obligation.

Conduct of a landlord which has been held to breach the obligation for ‘quiet enjoyment’ includes the:

1. erection of scaffolding or hoardings impeding customer flow to the premises;
2. disconnection of a sprinkler system;
3. ceasing to operate lifts and escalators in common areas which limit access by potential customers to the premises;
4. construction works taking place near the leased premises which effect the profitability of the tenant’s business;
5. failure by a landlord to prevent dust generated from an adjacent carpark entering the premises and interfering with the tenant’s window tinting business;
6. disruption of a tenant’s business caused by the activities of an adjoining tenant where the landlord failed to enforce the terms of the adjoining tenant’s lease; and
7. failure of the landlord to repair a leaking roof.

If there is a breach of the obligation for ‘quiet enjoyment’ the tenant will have a right to damages.

If the breach is serious enough the tenant may be entitled to terminate the lease, but a tenant’s right to terminate will be dependent upon the individual circumstances of the matter.

While a tenant has an entitlement to ‘quiet enjoyment’, a landlord can include a provision in the lease which limits the scope of the entitlement to ‘quiet enjoyment’ by making it conditional, for example, on the tenant paying rent and complying with its obligations under the lease.

In retail shops subject to the Retail Leases Act, there is a specific provision in New South Wales whereby a tenant can require a landlord to rectify certain things, for example rectifying any breakdown of any plant or equipment under the landlord’s care. If the landlord does not rectify the matter as soon as reasonably practicable after being requested in writing by the tenant to do so, the landlord is liable to pay the tenant reasonable compensation for any loss or damage suffered by the tenant as a consequence.

For further information, please contact our Commercial Team