The recent Mann Aviation case decision is a reminder of the importance of the distinction between a licence usually capable of determination on notice and a tenancy where the tenant will usually enjoy security of tenure. It was held that the occupation of various hangars and buildings at Fairoak Airport, Chobham in Surrey was in lawyer speak “a periodic tenancy by implication”. This type of periodic tenancy is one that will enjoy security of tenure under the 54 Act where the premises are occupied for business use and is therefore less precarious than a tenancy at will or licence.
In the Mann Aviation case the tenant company was in administration and it was essential to the disposal of the business that the tenant had the benefit of a tenancy.
A periodic tenancy arises by implication where there is no written agreement but the landlord and tenant intend the relationship to be one of landlord and tenant and a substantial periodic rent is payable. The extent to which the court will review the business relationship of the landlord and the tenant is demonstrated by the decision in Mann Aviation.
The landlord and tenant were involved in the repair, maintenance and adaption of certain helicopters and light aircraft, a highly regulated business. As part of the restructuring of a group of companies, of which the landlord and tenant formed part, all the relevant licences from the Civil Aviation Authority and other statutory bodies were issued to the tenant and replaced those issued previously to another member of the group. These licences required the tenant to be in effective control of its premises. At the time all parties to the group restructure would have understood that it generally was essential to the future success of the tenant that it enjoyed security in relation to its occupation of the premises and in particular to encourage companies to trade with it and to obtain banking facilities. Also with the consolidation of the business the tenant physically increased its occupation of all the premises. For these reasons and the fact that periodic payments were paid quarterly and described in the tenant’s accounts as rent the court held that the relationship between the landlord and the tenant had been established and a periodic tenancy by implication existed. The relationship was intended to be more than a licence or a tenancy at will.
The importance of the tenant’s control over the premises and its right to exclusive possession remains a critical factor in determining whether a right of occupation is a licence or a tenancy. The court examined in detail the tenant’s power to exclude the other group companies from the premises and that the tenant only permitted access to other parts of the group when they were not in use for the tenant’s own business.