Clear Channel UK Ltd v Manchester City Council

A tenancy depends on the parties’ substantive rights and obligations, rather than the label used in their agreement. It requires a right to exclusive possession of land that is capable of precise identification when the right is created.

An agreement granting permission to erect and maintain structures at generally described, undefined sites does not grant exclusive possession of the precisely located land beneath the structures. It therefore creates a licence, not a tenancy. A clear contractual statement of intended legal effect may reinforce that construction, particularly in a negotiated commercial agreement, but it cannot displace the substantive test.

Clear Channel erected and maintained 13 advertising displays on land owned by Manchester City Council under an agreed draft contract. After the Council sought to end the arrangements, Clear Channel claimed that the contract created tenancies protected by Part II of the Landlord and Tenant Act 1954. The Council contended that the contract granted licences only.

Etherton J held that the contract created licences in respect of the 13 sites, dismissed Clear Channel’s claim and ordered an inquiry into the Council’s damages. He separately held that a different agreement concerning the Chester Road site created a tenancy; that ruling was not cross-appealed. Clear Channel appealed on the status of the 13 sites and, contingently, the statutory protection question.

Appeal dismissed unanimously. Lord Justice Jonathan Parker, with whom Sir Christopher Staughton and Lord Justice Waller agreed, upheld Etherton J’s conclusion that the agreement granted licences rather than tenancies.

1. Whether an arrangement creates a tenancy depends on its substantive legal effect, not the terminology selected by the parties. A tenancy requires exclusive possession: Street v Mountford [1985] AC 809. The land over which exclusive possession is claimed must also be capable of precise identification when the right is created.

2. On its true construction, the agreement did not identify the concrete bases of the displays as the contractual sites. The schedule gave only general locations and no plans were attached. The agreement distinguished the “Sites” from the advertising displays, which included their concrete bases. Its maintenance, access and withdrawal provisions made practical sense only if each site was a wider, undefined area of Council land surrounding the display.

3. Those wider undefined areas could not be the subject of a grant of exclusive possession. The agreement accordingly gave Clear Channel permission to erect and maintain the displays, but no tenancy.

4. The Court added that the unequivocal clause describing the arrangement as a licence reinforced that construction in a commercially negotiated agreement made with legal advice. That observation did not qualify the substantive approach required by Street v Mountford.

5. Since no tenancy existed, it was unnecessary to decide whether any tenancy would have been protected by Part II of the Landlord and Tenant Act 1954.

• Court of Appeal (Civil Division) — dismissed Clear Channel’s appeal: [2005] EWCA Civ 1304.
• High Court, Chancery Division — Etherton J held that the agreement concerning the 13 advertising-display sites created licences, dismissed Clear Channel’s claim and ordered an inquiry into damages on the Council’s counterclaim. The lower-court citation was not stated in the judgment.