Watch your wording when dealing with advertising hoardings

When agreeing to let advertisers put up hoardings on your land you may be told that these arrangements should be excluded from the security provisions of the Landlord and Tenant Act 1954. Is this really necessary when the document that is presented for signature is, on the face of it, a simple licence?

A recent high court decision has given some welcome guidance on whether or not such an arrangement might give the advertising hoardings company a protected business tenancy. Such arrangements made between the landowner and the advertiser are usually contained in a written agreement that is described as a licence. The basic rule when looking at a dispute as to whether an occupier has the benefit of a tenancy or a licence is to ask whether the intention of the parties had been to grant exclusive possession for a term.

In the case of Clear Channel UK Ltd –v- Manchester City Council [2004] EWHC 2873 (Ch) the high court was asked to consider two arrangements. The first related to M shaped advertising sites, placed on concrete bases. The draft agreement proposed between the advertiser and the landowner provided for the payment of rent and set out the term of the agreement that was to expire in October 2002. The draft was never completed.

The second arrangement related to a site at Chester Road. There was never a formal written contract relating to the site but the main terms were agreed in correspondence. Clear Channel built an advertising hoarding on the site and paid rent on the basis of the agreed terms.

In December 2002 the council sought to terminate the arrangements that it had with Clear Channel relating to both sites. Clear Channel responded by claiming that it had tenancies of both sites.

Mr Justice Etherton held in relation to the M shaped advertising sites that Clear Channel had been granted licences and not a tenancy. He looked at the wording of the draft agreement that did not define the area of each site. There were no express rights of way to and from the individual advertising sites for the purposes of erecting, repairing or maintaining the site. This would make the arrangement defective if the council had intended to grant a lease of the specific area of each site. Instead, the council intended Clear Channel to use the larger, undefined areas of land owned by it. Clear Channel had therefore not been granted exclusive possession and this was enough to reject their claim that they had the benefit of protected tenancies.

Another important point was that the draft agreement related to thirteen different M shaped sites that were unconnected and geographically wide apart. It would be most unusual to grant a tenancy in one document of separate sites that are geographically some way apart.

However, the judge took a different view in respect of the Chester Road property. The draft arrangements did not indicate any intention to grant something less than exclusive possession. There had been continual use of the site for the purposes of Clear Channel's business and a substantial rent had been paid in respect of a lengthy period.

Whether such arrangements will be treated as tenancies or licences will depend very much on the facts of each case. What is clear is that the court is willing to hold that this type of arrangement can give the advertiser security of tenure and it will never be wrong for a landowner to exclude such rights.