The Answer Is Blowing In The Wind
A recent High Court decision has highlighted again how important it is to document the use of land.
In Gilpin v Legg  EWHC 3220 (Ch), the court was asked to consider the legal basis of the occupation of five beach huts. The history to each beach hut was slightly different but they had all been on one site for many years and the occupation of the huts was largely undocumented. The land owner had served notice on the beach hut owners stating that they were occupying as licensees and gave them three months’ notice to leave. He followed it up with a set of second notices (served without prejudice to the first set) claiming that they were periodic tenants and giving them just over six months’ notice to quit. The beach hut owners claimed insufficient notice had been given and the land owner asked the court to consider what the rights of the beach hut owners were.
The first question the court had to consider was whether the beach huts themselves were a fixture or a chattel. This idea often comes up in dilapidations claims. A chattel can be moved and taken away by a third party. A fixture is sufficiently fixed to the property to form part of the property and must be given back to the land owner at the end of a lease (and in the context of a dilapidations claim needs to be given back in a sufficient state of repair). This was important in this case as it was a crucial factor in considering the nature of the occupation.
The court held that the beach huts were chattels. They were only attached to the land in a very limited way to stop them moving in the wind. Apart from one hut, they could all be moved without damaging the huts.
The court then considered the question of whether the occupation of the hut gave rise to a tenancy or a license. This is a question that commonly arises with undocumented occupation of any kind and is often difficult to answer. One of the key issues is whether a third party has occupied the property exclusively, such that the land owner cannot use the land in any way. In this case, the court held the beach hut owners occupied the land on which the beach huts sat to the exclusion of the landlord, and therefore were periodic tenants. As such, the landlord’s second set of notices were effective to end the tenancies.
A court always looks behind the language that parties use to the real basis and purpose of occupation to decide what that interest is.
If you want to grant a third party a licence rather than a lease you have to ensure that the terms you offer are in line with the legal principles of a licence. In this case, if the land owner had required the beach hut owners to move their beach huts from time to time to another part of the site they would have had a much stronger case they were there under a licence.
All of these risks could have been avoided or managed if proper documentation was in place. Even where third party occupation has been ongoing for some time, getting documentation in place late in the day gives greater certainty for all parties going forward.
by Jen Morris