“It does exactly what it says on the tin”
Ronseal’s advertising campaign for their wood stains and preservatives, using the slogan “It does what it says on the tin”, was, when first unveiled, a welcome departure from the usual overblown claims and hype underpinning most product promotion. What made the campaign successful was the unambiguous labelling which conveyed a succinct message: our products will perform as described. If only agreements regulating the occupation of land were equally clear; unfortunately just because an agreement is labelled a licence, does not mean it is.
Does this matter?
Well, yes. Whether an occupier of property has a licence or tenancy is critical for the owner because a tenancy conveys rights of exclusive possession for a term, and may only be terminated on notice. Tenancies often attract additional statutory protection, making them more difficult to terminate. On the other hand, licences are personal agreements which permit an occupier to use land, rather than giving them a right of exclusive possession. Licensees will often share occupation of the land with the owner.
As any landowner will acknowledge, when allowing another person to use their land, the objective is not to allow that agreement to evolve into something they never intended; in other words, a landowner granting someone a licence to use land is unlikely to want it to turn into a tenancy.
Is it a licence or a tenancy? Street v Mountford
Perhaps the most important case over the last 100 years, Street established the key principles in determining whether an occupier of land or property does so under a licence or a tenancy. In this case, the court rejected the approach taken in a long line of cases which focused on whether or not the parties intended to create a tenancy or a licence. In Street, the court held that the realities of the occupier’s occupation had to be assessed for exclusive possession for a term at a rent.
Despite the court’s attempt to downplay the importance of the parties’ intentions in Street, subsequent case law has confirmed that what parties to an agreement actually intend is still significant. However, courts have consistently held that it is irrelevant what an agreement is labelled - a licence, tenancy (or anything else for that matter).
Beware of inadvertently creating a tenancy
The relationship between the landowner and occupier must be recorded in writing; if the landowner intends to grant the occupier a licence of their land, the agreement must reflect this and they must take steps to ensure that the occupier’s use of the land is consistent with that agreement.
Where the occupier’s use of the land goes beyond the scope of the licence agreement, by perhaps enjoying exclusive possession, the landowner may inadvertently create a tenancy by continuing to accept rent even though the occupier’s use of the land is inconsistent with the licence agreement.
Since Street, there is now a well-established legal principle that the courts will review the facts of the matter rather the label applied to it. Landowners should make sure they have agreements in place regulating the use of their land, and that their occupiers’ use of their land is consistent with these agreements.