National Car Parks Ltd v The Trinity Development Company (Banbury) Ltd

Whether an agreement creates a tenancy or licence depends on its substance, assessed from the agreement as a whole. A declaration that the arrangement is a licence is not determinative, but it remains a relevant pointer, particularly where commercial parties acted with legal advice. The central question is whether the occupier has exclusive possession: the ability to exclude strangers and the landlord, subject only to limited reserved rights of entry. Contractual obligations permitting temporary access for exceptional works may secure the landlord’s cooperation without reserving possession or a right of re-entry. Specific rights granted to the landlord, such as limited free parking, do not necessarily negate exclusive possession if they are consistent with a licence when the agreement is read as a whole.

National Car Parks Ltd appealed against the dismissal of its claim for a declaration that an agreement to manage a car park created a tenancy. The agreement was described as a licence and contained a three-month termination provision. The respondent, whose predecessor had entered the agreement, served notice to terminate it.

The parties agreed that the notice was invalid if the agreement created a tenancy protected under Part II of the Landlord and Tenant Act 1954. The High Court held that the agreement was a licence, principally because the landlord had retained possession and control. The central issue on appeal was whether the agreement, properly construed, granted NCP exclusive possession.

1. Appeal dismissed. Arden LJ delivered the leading judgment. Buxton LJ agreed and added observations on the effect of Street v Mountford; the Vice-Chancellor agreed with both judgments. The order was therefore unanimous.
2. The court must determine the substance of the transaction, not merely its label. Clause 8, stating that the agreement did not confer a tenancy, was not determinative and created no presumption. It was nevertheless relevant as part of the agreement’s overall context. The parties were commercial entities presumed to understand the significance of the wording, and there was no suggestion that the terms were a sham.
3. The relevant inquiry was whether NCP had exclusive possession in the sense identified in Street v Mountford: the right to exclude strangers and the landlord, except where the landlord exercised a limited contractual right of entry for maintenance or repair.
4. The landlord’s controls over the business, including provisions concerning parking charges, insurance, security and maintenance of landscaped areas, were only pointers. They were not sufficiently substantial to determine the construction. The absence of a covenant for quiet enjoyment, an express right of re-entry and an express grant of occupation also supported the conclusion that the agreement was a licence.
5. Clause 3(13), granting the landlord 40 free parking spaces, did not prevent the agreement from being a licence. Properly construed, it limited free parking to those spaces but did not exclude the landlord from entering for other purposes.
6. The second limb of clause 7 was not a reserved right of re-entry. It required NCP to provide reasonable assistance and facilities for temporary resurfacing in exceptional circumstances. Its purpose was to secure NCP’s cooperation and access for works, not to reserve possession to the landlord. Reading the agreement as a whole, it conferred a licence rather than a tenancy. The appeal was dismissed with costs, subject to detailed assessment, and permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): Appeal from the order of His Honour Judge Rich QC, sitting as a deputy judge of the Chancery Division, dated 9 November 2000. The appeal was dismissed with costs, subject to detailed assessment.