Clear Channel UK Ltd v Manchester City Council

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Jonathan Parker,Sir Christopher Staughton,Lord Justice Waller
Judgment Date09 November 2005
Neutral Citation[2005] EWCA Civ 1304
Docket NumberCase No: A3/2005/0048

[2005] EWCA Civ 1304

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

The Hon Mr Justice Etherton

HC03C04113

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Lord Justice Waller

Lord Justice Jonathan Parker and

Sir Christopher Staughton

Case No: A3/2005/0048

Between
Clear Channel UK Limited
Appellant
and
Manchester City Council
Respondent

Mr John McGhee QC (instructed by Messrs Hammonds) for the Appellant

Mr Jonathan Brock QC (instructed by Manchester City Council Legal Department) for the Respondent

Judgement

Lord Justice Jonathan Parker
1

At issue in this appeal is the legal effect of a contract made between Clear Channel UK Ltd ("Clear Channel"), the claimant in the action, and Manchester City Council ("the Council"), the defendant in the action, pursuant to which Clear Channel erected and maintained 13 large advertising displays at various prominent sites in Manchester owned by the Council. The issue is whether the effect of the contract was to grant Clear Channel a tenancy or merely a licence.

2

In the action, Clear Channel contends that the contract created a tenancy, and it seeks declaratory relief to that effect. The Council counterclaims for declaratory relief in the opposite sense, contending that the contract granted merely a licence which has been validly terminated. On that basis, the Council seeks an inquiry as to damages in respect of the period following the alleged termination of the licence. The Council further contends that if (which it denies) the true effect of the contract was to grant a tenancy, the tenancy is not protected by Part II of the Landlord and Tenant Act 1954 ("the 1954 Act") since Clear Channel has not occupied, and does not occupy, the land the subject of it for the purposes of section 23 of the 1954 Act.

3

At trial, Etherton J held that the effect of the contract was to grant a licence. Accordingly by his order dated 14 December 2004 he dismissed Clear Channel's claim and ordered an inquiry as to damages on the Council's counterclaim. He refused Clear Channel permission to appeal, but permission was granted by Jacob LJ on the papers on 1 February 2005.

4

Also at issue in the action was the legal effect of a separate contract between the parties for the erection and maintenance by Clear Channel of an advertising display at another site in Manchester known as the Chester Road site. Etherton J held that that contract created a tenancy, and by his order he so declared. There is no cross-appeal by the Council against that part of the judge's order.

5

Thus the only issues which fall to be determined on this appeal are (a) whether, in relation to the 13 displays, the contract in question created a tenancy (as Clear Channel contends) or merely a licence (as the Council contends and as the judge held); and (b), if it created a tenancy, whether that tenancy is protected by Part II of the 1954 Act.

6

The facts are undisputed and can be shortly stated.

7

Clear Channel carries on the business of constructing and maintaining advertising displays. The 13 displays with which this appeal is concerned were erected in 2000 and 2001. They are all constructed to the same basic design. Each display consists of a substantial superstructure in the shape of a large 'M'. The superstructure is fixed to a rectangular concrete base which is embedded in the ground.

8

The project for the erection and use of the displays had been under discussion between Clear Channel and the Council since 1998. Planning applications were duly submitted by Clear Channel to the Council and the necessary permissions granted. Plans were attached to the planning applications, but for purposes of identification only. In October 1999 a detailed site survey was carried out by Clear Channel and in August 2000 the positions of the concrete bases on which the displays were to be erected were agreed between Mr Watson, Clear Channel's Operations Manager, and Mr Houghton on behalf of the Council and marked out on the ground with spray paint. In about September 2000 construction work began.

9

No formal agreement was ever concluded between Clear Channel and the Council relating to the erection and maintenance of the displays, but it is common ground that the parties' respective rights and obligations in that respect are contained in a draft agreement sent by the Council to Clear Channel in March 2001. I will accordingly refer to that draft agreement hereafter as "the Agreement".

10

In December 2002 the Council informed Clear Channel that it would be terminating the existing arrangements (that it so say, the arrangements contained in the Agreement), but that Clear Channel would be given the opportunity of tendering for a new contract. Clear Channel objected, claiming that it was a tenant of the land on which the advertising displays had been erected and that its tenancy was protected by Part II of the 1954 Act. The Council responded by serving notice purporting to determine Clear Channel's licence with effect from 10 November 2003. That led to the commencement of the present action.

11

There is no issue between the parties as to the applicable legal principles. In particular, it is common ground (a) that whether a contractual relationship governing the use and occupation of land creates a tenancy or a licence depends not on the label which the parties have applied to it but rather on their substantive rights and obligations under it; and (b) that for a tenancy to exist the occupier must have the right to exclusive possession of the land in question (see Street v. Mountford [1985] AC 809).

12

Mr John McGhee QC (for Clear Channel) accepts, as he must, that it is of the essence of a right of exclusive possession, and hence of a tenancy, that the area or areas of land over which the right is said to exist should be capable of precise identification at the date when the right is said to be created. He accordingly accepts that if the Agreement, on its true construction, does not sufficiently identify the land in respect of which a tenancy is said to have been created, the case for a tenancy must fail. He submits, however, that on its true construction the Agreement fulfils that requirement. Relying on the fact that by March 2001 the position of the concrete bases of the displays had been precisely marked out on the ground, Mr McGhee submits that on its true construction the Agreement created a tenancy of those areas: that is to say, a tenancy of the land occupied by the concrete bases.

13

For the Council, Mr Jonathan Brock QC contends that on its true construction the Agreement refers only to larger undefined areas of land owned by the Council – that is to say to the general location of the displays – and that one cannot spell out of it the grant of a right of exclusive possession over the specific areas of land occupied by the concrete bases.

14

Hence there is, in effect, a preliminary issue of construction as to whether the Agreement contains a sufficient definition of the land which is said by Clear Channel to be the subject of the alleged tenancy.

15

I accordingly turn straightaway to that issue, since it is potentially decisive of the case.

16

I begin by referring to those provisions of the Agreement which are relevant to that issue.

17

The Agreement recites (in recital 1.1) that the parties have...

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