Clear Channel UK Ltd v Manchester City Council

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Etherton
Judgment Date14 Dec 2004
Neutral Citation[2004] EWHC 2873 (Ch)
Docket NumberCase No: HC03C04113

[2004] EWHC 2873 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

The Honourable Mr Justice Etherton

Case No: HC03C04113

Between
Clear Channel Uk Limited
Claimant
and
Manchester City Council
Defendant

Mr John McGhee QC (instructed by Hammonds) for the Claimant

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

Hearing dates: Monday 22- Thursday 25 November 2004

Judgment Approved by the court

for handing down

(subject to editorial corrections)

INDEX

Introduction

Background Facts

The Advertising Hoardings

The October 2000 Draft

The July 2001 Letter

The 2003 Draft Agreement

Evidence

Street v Mountford : the Starting Point

The M Sites

Clear Channel's Case

Analysis

Occupation

MCC's Application to Re-Amend

The Chester Road Site

MCC's Case

Analysis

Decision

1–7

8–37

38–43

44–48

49

50–55

56–59

60–63

64–75

76–103

104–105

106–125

126–131

132–158

159

Mr Justice Etherton

Mr Justice Etherton

Introduction

1

In these proceedings the Claimant, Clear Channel UK Ltd ("Clear Channel"), seeks a declaration that it has a tenancy from the Defendant, Manchester City Council ("MCC"), of 13 sites in Manchester on which it has erected advertising stations ("the M Sites").

2

By its amended Defence and Counterclaim, MCC claims that Clear Channel was granted licences, and not tenancies, in respect of the M Sites, and that those licences were terminated by letter dated 9 October 2003.

3

MCC further alleges that, if Clear Channel has a tenancy of any of the M Sites, such tenancy is not protected by Part II of the Landlord and Tenant Act 1954 ("the 1954 Act") because Clear Channel has not, and does not, occupy any of those premises for the purposes of section 23 the 1954 Act.

4

Further, MCC counterclaims for a declaration that, apart from the 13 M Sites, Clear Channel has erected and maintained an advertising hoarding on a site at Chester Road, Manchester (the Chester Road Site") pursuant to a licence and not a tenancy.

5

MCC also counterclaims damages for use of the Chester Road Site from 1 January 2004, and for use by Clear Channel of the M Sites from the date of termination of the alleged licence.

6

By its amended Reply and Defence to Counterclaim, Clear Channel claims that MCC leased the Chester Road Site to Clear Channel for a term of 5 years from 15 June 2002; alternatively, Clear Channel has been and remains an annual tenant of the Chester Road Site from 15 June 2002. It denies that its right to occupation and possession of the Chester Road Site has been properly determined.

7

Master Bowman ordered on 16 March 2004 that there was to be excluded from the trial, which has taken place before me, MCC's Counterclaim for damages for use by Clear Channel of the M Sites and the Chester Road Site.

Background Facts

8

Clear Channel was previously known as More Group UK Ltd trading as More O'Ferrall. It carries on business in the construction and maintenance of advertising hoardings and the use of those hoardings to carry advertisements.

9

Towards the end of 1998 MCC, as part of its regeneration of Manchester's city centre, began the process of identifying sites, owned by MCC, for the erection of advertising stations to promote the image of Manchester and to promote various significant events in the city.

10

MCC and Clear Channel entered into discussions for the erection and maintenance by Clear Channel of advertising stations in the shape of giant Ms on various sites around the city.

11

Clear Channel commissioned a number of designs. One particular M design was ultimately approved by MCC in September 1999.

12

In about July 2000 MCC and Clear Channel reached an agreement in principle for the construction and erection by Clear Channel of M advertising stations ("the Ms") on several sites. In return for a profit-sharing agreement, Clear Channel would sell advertising space on the Ms, subject to MCC being provided with free or "subsidised faces" on the hoardings for its own purposes.

13

Clear Channel submitted planning applications, where required, in July and August 2000. Consent was obtained shortly afterwards.

14

On 5 September 2000 Clear Channel was granted a licence to enter MCC's land in order to erect the Ms. Clear Channel began placing concrete bases on the M Sites at the beginning of September 2000. The Ms were then bolted to those bases.

15

While the Ms were under construction, drafts of a written agreement setting out the terms of Clear Channel's use of the Sites were prepared. Under cover of a letter dated 2 October 2000 MCC enclosed a draft in a form which was, broadly speaking, agreed ("the October 2000 Draft").

16

The October 2000 Draft related to 13 sites. It provided for the payment of "rent" equal to the greater of 60% of the net revenue (as defined) received by Clear Channel for each of those sites and £220,000 per annum.

17

The term was expressed to be for a period from the date of the agreement to 31 October 2002, subject to the other provisions of the agreement.

18

In November 2000 Clear Channel paid MCC £210,000, being the amount due to MCC under the October 2000 Draft for the period to 31 December 2001.

19

Subsequently, minor amendments to the October 2000 Draft were discussed between MCC's employee, Ms Gaynor Corfe, a Fellow of the Institute of Legal Executives, and the in-house solicitor acting for Clear Channel, Ms Selina Emeny.

20

Under cover of a letter of 13 March 2001, Miss Corfe sent Ms Emeny a further draft agreement ("the March 2001 Draft Agreement"). In a letter dated 22 March 2001 Ms Emeny confirmed that draft was in an agreed form.

21

The March 2001 Draft Agreement, like the October 2000 Draft, specified 13 sites. A fourteenth site was added in May 2001, but removed in October 2002. More recently, two of the original sites have been vacated by Clear Channel. None of those changes affects the determination of the points of principle in issue in the trial.

22

Notwithstanding the March 2001 Draft Agreement was never executed, it is common ground that Clear Channel has used and maintained the Ms on the M Sites and paid "rent" on the terms of that document.

23

On 22 January 2002 Clear Channel paid MCC a further £200,000 for the period from 1 January 2002 to 31 December 2002.

24

In December 2002 MCC informed Clear Channel that it would be putting the M Sites out to tender for future advertising, and would be terminating the existing arrangements, but Clear Channel would be given the opportunity to tender for the new contract. Clear Channel objected, and claimed that it had a tenancy of the M Sites protected by Part II of the 1954 Act.

25

In February 2003 Clear Channel submitted a tender, without prejudice to its contentions. In June 2003 MCC informed Clear Channel that it was not successful in the tender, and that a new contract was to be awarded to Maiden Outdoor Advertising Ltd, one of Clear Channel's competitors.

26

On 9 October 2003 MCC served notices to determine Clear Channel's rights to occupy the M Sites under any contractual arrangement. MCC also served notices under the 1954 Act s. 25, without prejudice to its primary contention that no tenancies had been granted. Counternotices under Part II of the 1954 Act have been served by Clear Channel, which has commenced proceedings in the Manchester County Court for the grant of new tenancies. By agreement, those proceedings have been stayed pending the outcome of the trial before me.

27

So far as concerns the Chester Road Site, in February 2001 MCC entered into discussions with Clear Channel for the grant of rights to maintain an advertising station at that Site.

28

By letter dated 19 July 2001 ("the July 2001 Letter") from Mr Christopher Sheppard, the head of MCC's valuation and property services department, to Clear Channel, Mr Sheppard confirmed that he would be recommending acceptance of Clear Channel's offer in respect of the Chester Road Site "on the basis of the … main terms" set out in that letter.

29

At the conclusion of that letter, Mr Sheppard asked Clear Channel to confirm that those terms were acceptable, whereupon he would seek final approval and would instruct MCC's solicitors to complete the legal formalities.

30

No such confirmation was given.

31

The July 2001 Letter was headed "without prejudice" and "subject to contract". There never was, in fact, a formal contract relating to the Chester Road Site signed or executed by both parties.

32

Clear Channel produced a one-off design for the Chester Road Site, for which it obtained planning permission on 13 December 2001.

33

By March 2002 the principal terms of the agreement concerning the Chester Road Site were agreed.

34

Clear Channel erected the advertising structure on the Chester Road Site in about June 2002, and thereafter used and maintained it.

35

Clear Channel paid MCC at the rate of £220,000 per annum for use of the Chester Road Site for the period up to 31 December 2003.

36

In about June 2003 MCC sent Clear Channel a draft lease in respect of the Chester Road Site ("the 2003 Draft Agreement"). It arrived without prior notice. It appears to be common ground that the 2003 Draft Agreement was never the subject of negotiation or discussion between the parties. It was never executed.

37

Various notices have been served by MCC to terminate Clear Channel's rights in respect of the Chester Road Site. It is sufficient, for the purposes of this judgment, to refer to a letter from MCC dated 27 January 2004. That letter gave notice, expressed to terminate any right that Clear Channel might have to erect and maintain an advertising hoarding on the Chester Road Site, expiring a reasonable time after the notice and, in any event, by 16 April 2004; alternatively, if Clear Channel...

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