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Decision on the meaning and effect of a ‘Transfer of Control Agreement’ under Schedule 13 to the School Standards and Framework Act 1998

DATE: 26 Jan 2018

David Nicholls represented the successful Governing Body of a Kent primary school in its claim to recover possession of part of the school premises that were occupied by a nursery under an agreement described as a ‘Transfer of Control Agreement’ (or ‘TOCA’).  The defendants resisted the claim on the basis that they said the agreement created a lease, not a licence, and that it was protected as a business tenancy under the 1954 Act.

Although the agreement was described as a ‘Transfer of Control Agreement’, it was – somewhat unusually – for a term of just over 10 years and it could only be terminated following service of one year’s written notice (which was given).

This is the only known decision in relation to the meaning and effect of a Transfer of Control Agreement.  Judgment was handed down shortly before Christmas 2017.  District Judge Wilkinson (sitting in the County Court at Dartford) held that:

  • There was no real indication in the 1998 Act as to when a Transfer of Control Agreement would be a Transfer of Control Agreement.  For instance, there are no prescribed criteria other than that its purpose shall be to promote community use of the whole or part of the school premises (which was clearly met in this case).
  • Therefore, unlike the usual approach to assessing whether an agreement creates a lease or a licence, the label that the parties have ascribed to the agreement is likely to be determinative.
  • In this case, the agreement was described as a ‘Transfer of Control Agreement’ and it is plain that the parties intended to create such an agreement in accordance with the 1998 Act.  For instance, the agreement specifically referred to provisions in Schedule 13.
  • In addition, the agreement was made by the Governing Body which did not have any proprietary interest in the school premises and which did not have legal capacity to grant a lease.  These two points also suggested that the agreement was a licence.
  • Further, the court should consider all the circumstances in determining the nature of a party’s occupation of land and these included the fact that the nursery could only be accessed via the school itself and not directly from the public highway.  This was another relevant factor that pointed to the agreement being a licence.
  • It therefore followed that the agreement was a ‘Transfer of Control Agreement’ and, as a result of the statutory provisions in Schedule 13 to the 1998 Act, the agreement was subject to an obligation on the defendants to permit the Governing Body to use the subject premises for the benefit of the school.
  • The effect of this and the other circumstances referred to above was that the agreement did not amount to a genuine grant of exclusive possession and it therefore created a licence, which had been terminated by the Claimants, entitling them to a possession order forthwith.