National Car Parks Ltd v The Trinity Development Company (Banbury) Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 09 November 2000 |
| Judgment citation (vLex) | [2000] EWHC J1109-12 |
| Docket Number | NO: HC/2000/03265 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 09 November 2000 |
[2000] EWHC J1109-12
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2
Hhj Judge Rich Qc
(Sitting as an Additional Judge of the Chancery Division)
NO: HC/2000/03265
MR J FURBER QC (instructed by Hamlins, London W1) appeared on behalf of the Claimant
MR N THOMAS QC (instructed by Field Cunningham & Co, Manchester M3) appeared on behalf of the Defendant
9th November 2000
MR JUSTICE RICH: By an agreement, which was called a licence, dated 18th November 1982 the claimants agreed with Standard Life Assurance Company to manage and administer the defined licensed premises, namely the vehicle park shown on the plan as accommodating 213 cars and the nearby landscape areas at Cherwell Centre, Banbury, and to operate the vehicle park as a shoppers car park. Clause 5 of the agreement provided for the claimants to pay in respect of such right a percentage, originally 75 per cent and now apparently 85 per cent, of its net profits as there defined. Clause 2 provided that the agreement continue in force from year to year until determined by either party on three months' written notice.
On 4th May 2000 Standard Life's successors in title, the present defendant, gave such notice, but the claimants contend that it is ineffective to determine the agreement because on its true construction it granted a tenancy protected by Part 2 of the Landlord and Tenant Act 1954. The defendants accept that if the agreement did indeed grant a tenancy that is the result. The sole issue in these proceedings is, therefore, whether on its true construction the agreement was properly described as a licence or whether it granted a tenancy.
It was held by the House of Lords in Street v Mountford [1985] AC 809 that, subject to certain immaterial exceptions, an agreement which on its true construction grants exclusive possession of premises for a term at a rent is a tenancy and not a licence. This is a matter of law and not either of description or agreement. As Lord Templeman said at page 819:
"But the consequences in law of the agreement, once concluded, can only be determined by consideration of the effect of the agreement. If the agreement satisfied all the requirements of the tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting that they only created a licence. The manufacture of a five-pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade."
It is clear that this agreement was for a term and at a rent. Accordingly, the issue before me has narrowed to the question of whether on its true construction the agreement granted to the claimants exclusive possession of what are called the licensed premises.
Clause 8 of the agreement provides:
"This licence is not intended by either party hereto to confer upon the licensee any right or interest in the nature of a tenancy and gives no proprietary interest to the licensee in the licensed premises."
This indicates the intention of the parties and it is not to be assumed that they failed in such intention, although the need to express it raises a question, and that is, what is the effect of the agreement which they actually made and not what was it that they expressed themselves as intending to make?
There is no issue between the parties as to the proper approach to that question. It is thus expressed in Hillen Redmond on Landlord and Tenant at paragraph A-562:
"In deciding whether a grant amounts to a lease or is only a licence regard must therefore be had to the substance rather than the form of the agreement, to the relationship between parties as determined by law and not by the description which they choose to put on it. To put it another way, it is the effect of the agreement in law which determines its category and not what the parties say their intention was, still less the label they put on the agreement. One must looked at the transaction as a whole and at any indications one finds in the terms of the contract between the two parties to find whether in fact it is intended to create a relationship of the landlord and tenant or that of a licensor and licensee."
Exclusive possession has been defined as the ability on the part of the tenant to exclude all persons, including the landlord, from possession. As Hoffman J said in Essex Plan v Broad Minister Limited [1980] 43 EG 84:
"A tenant armed with exclusive possession can keep out strangers and keep out the landlord unless the landlord is exercising limited rights reserved to him under the tenancy agreement to enter and view and repair."
In Street v Mountford it was conceded in the House of Lords that the agreement there being construed did grant exclusive possession, but the concession followed its having been so held in the Court of Appeal because it was thought necessary to include clause 3 in the agreement which provided as follows:
"The owner or his agent has the right at all times to enter the room, to inspect its condition, read and collect money from meters, carry out maintenance works, install or repair furniture, or for any other reasonable purpose."
In this case the agreement is careful not to reserve any right of entry. It follows a precedent of an agreement which was construed by the Court of Appeal as a licence by imposing upon the so called licensee this obligation in clause 7:
"The licensee shall not impede in any way the officer's servants or agents of the licensor in the exercise by them of the licensor's rights of possession of the licensed premises."
I pause there in the reading of the clause in order to compare it with the clause used in the agreement which had been considered by the Court of Appeal in Shell-Mex & BP Limited v Manchester Garages [1971] 1 WLR 612 set out at page 616. It reads:
"'Not to impede in any way the officers servants or agents of the company in the exercise by them of the company's rights of possession and control of the premises …'"
I read also only the first few words and will return to the rest. But those few words so far are identical with those in clause 7, except that there is added a reference in the precedent to the "company's right of control".
The parties accept that the grantor's right of control of the premises may be indicative of whether the grantor has granted exclusive possession. But the ability to control the use of the premises arises from the grantor's retention of possession, it is not essential to it. The distinction which is essential is whether the grantor has retained possession rather than merely reserving rights of entry over premises in respect of which he has granted exclusive possession to the grantee.
Buckley LJ in the Shell-Mex case gave a judgment which, it is accepted, may be relied upon without qualification, notwithstanding the decision in Street v Mountford where the grounds relied upon by Lord Denning were criticised. Buckley LJ's reasoning for concluding that the document granted a licence only was as follows as set out at page 618:
"One must looked at the transaction as a whole and at any indications that one finds in the terms of the contract between the two parties to find whether in fact it is intended to create a relationship of landlord and tenant or that of licensor and licensee. There are in this case none of those features present which in Addiscombe Garden Estates Limited v Crabbe [1958] 1 QB 513 led the court there to conclude that the intention of the parties was to create a tenancy. In that case there was a clause expressly permitting the grantors to enter on the premises to inspect the plant, which would have been unnecessary had they had a right to enter on the premises apart from the agreement. There was a covenant for quiet and uninterrupted enjoyment by the grantee —a covenant appropriate to a lease but inappropriate, I think, to a licence where the licensor had a right of possession in respect of the subject matter; and, perhaps most cogent of all, there was a term for re-entry upon breach of covenant, which is a term of a kind quite inappropriate, in my judgment, to a licence. Nothing of that kind is to be found in the present case. The only clause which points one way or the other, I think, is clause 19 in the first schedule which...
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