Licence to have fun
A recent case has again highlighted the importance of properly documenting a tenancy or licence arrangement with an occupier.
We have set out below a summary of the facts, the issues considered by the court and some things to consider if you are looking to grant a licence instead of a tenancy.
A fairground ride operator, Mrs Holland, had a bumpy ride at St Giles Fair in Oxford when she was prevented from bringing her large ride, the ‘Cyclone’, to the fair by Oxford City Council. The Council reduced the size of the two pitches at the fair that Mrs Holland had used for many years.
Did Mrs Holland have a right to occupy the two (non-reduced in size) pitches at the fair? This would depend on whether she had a lease or a licence.
Lease vs Licence
There are two main points to consider when deciding whether there is a tenancy or a licence in this situation:
- Did the terms of Mrs Holland’s occupancy grant her exclusive possession of the two pitches?
- Did the arrangements between Mrs Holland and the Council entitle Mrs Holland to use the pitches on an annual basis or was a new agreement established each year?
Mrs Holland claimed that she had an annual periodic tenancy of the pitches on the following basis:
- in allocating pitches, the Council followed a set of rules which gave operators who had a particular site at a particular fair priority over that site each year;
- Mrs Holland had used the same two pitches at the fair for many years under this set of rules; and
- in the Council’s ‘Conditions of Letting’ that Mrs Holland received, there was no right of entry granted to the Council.
The Council claimed that Mrs Holland only had an annual licence on the following basis:
- pitches at the fair were allocated by the Council upon application from operators and allocated accordingly on an annual basis; and
- the Council used the words “tenancy” and “letting” in documentation provided to her.
The Court decided that Mrs Holland held a licence and not a tenancy over the two pitches at the fair. The Court placed emphasis on whether the Council were free to access the fair pitches at any time (which the Court decided they did) rather than how much control the Council had over the pitches.
Mrs Holland was unable to reclaim any losses from not being able to run the Cyclone.
This case emphasises the point that despite wording in correspondence and documentation indicating a tenancy, this does not necessarily mean that one is granted; be careful of which right you are granting or being granted. You should consider the following points if you are considering granting a licence:
- there should be nothing in the licence to suggest that the landlord’s control or right of access is limited;
- if a licence is not well drafted, it can grant the tenant a statutory right to renew its tenancy at the end of term; and
- licences are a preferable way of granting a potential occupier a short term arrangement.
For more confirmation contact our Real Estate team on 0345 070 6000.