This article has been contributed by Darrell Gold LLB with Robins Appleby & Taub LLP
The right of a tenant to peacefully enjoy its premises without interference from a landlord arises at law and is clearly seen from an old English case where the court held that “the basis of it is that the landlord, by letting the premises confers on the tenant the right of possession during the term and impliedly promises not to interfere with the tenant’s exercise and use of that right to possession during the term.”
In Ontario, the common law position has been codified in section 23(1), paragraph 1 of The Conveyancing and Law of Property Act. However, if the lease contains an express covenant for quiet enjoyment, it will supersede the implied covenant.
The question that usually arises is what constitutes an interference with that right to enjoy its premises resulting in a claim for breach by the landlord?
Typically the lease clause for quiet enjoyment is qualified by limiting it to interference by the landlord or those claiming through the landlord (and not third parties such as other tenants or mortgagees). Further, it is enforceable so long as the tenant is not in default under the lease and it is typically subject to the lease terms that allow for the landlord to enter or make repairs or improvements to the property that may cause some interference.
Practically speaking, at law the covenant is only violated where the landlord substantially interferes with the tenant’s possession or with his/her ordinary enjoyment of the premises. A temporary minor interference will not be a breach of the covenant for quiet enjoyment. The facts as always are relevant to the determination. What may be minor interference in one case can be substantial in another case with a different set of facts.
It used to be the law that direct or physical interference was necessary for a breach to occur “However, the more current view, and one with which I am in agreement, is that any act by a landlord which is an interference with the tenant’s ability to use the premises for the intended purposes, may constitute a breach of the right to quiet enjoyment”. (Watchcraft Shop Ltd. v. L & A Development (Canada) Ltd.). That can now include noise, odours, mess and even attempting to lure away customers of the tenant, or breaching a restrictive covenant.
To establish the breach the following statement by the Ontario Law Reform Commission which continues to be applicable should be considered a strong guideline:
“… a breach of the covenant should arise from any acts which result in the interference, interruption or disturbance of the tenant’s reasonable peace, comfort, or privacy being interfered with, whether due to liquids, gases, vapours, solids, odours, vibration, noise, abusive language, threats, fires, the total or partial withholding of heat, electricity, water, gas, or other essential services, or the removal of windows, doors, walls, or other parts of the rented premises. The Commission is, however, of the view that the proposed legislation should not expressly delimit the types of acts which might constitute a breach of the covenant, for to do so might unduly fetter the court in its attempts to decide each case on its own merits, having regard to all the circumstances.”
It is important to note that even where a lease gives the landlord rights to do things such as repairs or improvements it can still be held liable for a breach of the quiet possession covenant where “…its actions …… were reasonably foreseeable to cause an interruption, or if it had shown reasonable care, ought to have foreseen.”(Harrison, Ainslie & Co. v. Muncaster).
There also cases that show that a failure on the part of the landlord to do work such as repairs to a leaky pipe can be a breach of the covenant if the failure to do so amounts to substantial interference with the tenant or its business. That means that landlord can be liable for both failing to repair as well as repairing where required.
Even where a lease provides for the landlord to “from time to time alter, expand, improve, diminish, maintain, operate, renovate, re-merchandise and supervise the Project”, carrying out such rights have been found to be grounds for damages for breach of the covenant.
So what are the rights and remedies of the tenant where it thinks a breach has occurred? Where a tenant establishes that the covenant has been breached the issue of remedies comes into play and there are a few to consider including: damages, termination, injunction to stop the interference, set-off against rent (provided there is an express covenant in the lease to permit this). Case law suggests that damages are usually the remedy most often ordered by the Courts. Termination will only occur where the breach is fundamental and that is not easy to establish.
The Lessons: When drafting the lease the quiet enjoyment clause should be given attention by both parties and considered in light of the landlord’s obligations and rights to carry out repairs and improvements to the building. The tenant should consider how its use could be impacted by the landlord, and any other tenants in the project. The time to address the issues is at the negotiation stage not after the lease is signed. If major improvements or additions are planned then it should be clear in the lease that the tenant acknowledges that and understands there will be interference possibly substantial but the landlord can agree to take reasonable steps to minimize where reasonable, such interference.
Disclaimer: This article is for general information purposes only and not intended as or to be relied upon for legal advice. Consult with a lawyer for your unique situation.
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