148: Beach huts – a lease or a licence?

In the recent case of Gilpin v Legg [2017] EWHC 3220 (Ch), it was considered whether beach huts situated on plots of land were being occupied under a licence or a periodic tenancy under a lease, and therefore if the landowner was entitled to possession of the land.

Background and facts of the case

The claimants were the owners of five beach huts situated on fields belonging to a single landowner in Portland Bill, Dorset.

Each hut was constructed at different times and occupied by different owners. Each had a separate ownership history and there was no single form agreement used for all the huts so the terms and documentation differed substantially between each hut. There is also no statutory position setting out the ownership rules on beach huts nationally or in the local area.

When the claimants refused to sign up to new licence agreements, the landowner served two termination notices on the claimants. The first notice was to terminate their rights under a licence to occupy on three months’ notice and the second notice, served without prejudice to the first, was to terminate their rights under a lease with six months’ notice.

The claimants then brought a case for the court to determine the validity of these notices. They argued that the first notice failed as they were occupying under leases not licences and that the second notice was invalid as there is no right for the landlord to serve such a notice to terminate their lease.

Main issues in the case

• Leases or licences? The court applied the test set out in the case of Street v Mountford to consider if the claimants were occupying the landowner’s land under a lease or licence. This test sets out that a lease gives exclusive possession for a fixed or periodic term with rent and can be express or inferred.  A licence however is merely a personal right to occupy. These requirements for a lease were all met by the beach huts. The beach huts occupied the same space on the landowner’s land since they were first assembled (even though they were later found to be chattels) so they had exclusive possession as these areas were not available for others to occupy. There was no express documentary reference to a term, although this was inferred by the fact that the right to site the huts was granted from year to year with the beach hut fees paid annually as rent. The claimants were therefore clearly occupying under leases.
• Type of lease or licence? As the rents were paid annually and there were no documents setting out the details of the term, the beach huts were found to be occupied under annual periodic tenancies. These can be terminated by giving six months’ notice. Therefore the second notice to terminate served by the landowner had validly terminated these beach hut leases. The claimants put forward arguments that they had five yearly periodic tenancies because the planning permissions for the beach huts originally ran for five years and that the arrangements could also be life tenancies as previous occupiers under the beach hut leases had been told they could stay forever. They therefore claimed that their tenancies could not have been validly terminated by the second notice. However these arguments were both rejected by the court as leases for a term longer than three years must be created by deed and there was no evidence that any previous occupiers were told they could stay indefinitely when the terms were originally agreed.
• Fixtures or chattels? The court also had to decide if the beach huts were fixtures or chattels. The key test used here was the degree of their annexation to the land. The claimants claimed that the beach huts were bespoke fixtures, specifically built on the site and not designed to be mobile so they only way to move them would be to dismantle them. The landowner disputed this and provided detailed evidence that the huts were constructed out of separate wooden panels which were capable of being dismantled currently or at the time they were built. The court agreed with this and found that the huts were chattels.

Decision and conclusions

As set out above, the court declared that the beach huts were occupied under annual periodic tenancies and the second notice to terminate served by the landlord validly terminated these. The fact that the beach huts were found to be chattels did not impact this.

This case is a good reminder of the difference between a lease and a licence and that the form of a lease does not matter if the arrangement has exclusive possession for a fixed or periodic term with rent.