Landlords and managing agents probably get bored as property solicitors wax lyrical about whether a licence might be construed as a lease, and about the constituent elements of a lease, typically because of (valid) concerns about unintentional grant of a lease with LTA 1954 security of tenure.
This is a case where it was actually intended that a lease be granted, but the Court decided it had not been, because it was all a sham.
Normally, if a lease is granted, the liability for rates passes to the tenant; if that tenant never actually pays (and then goes into liquidation), that is not (normally) the landlord's problem. However, the Court decided here that the landlord never intended for the tenant to take rateable occupation, nor pay rates: as such, the unpaid rates liability was the landlord's problem.
Void space can be an expensive headache for landlords, but there are genuine, robust ways of seeking to mitigate liability for empty property business rates. This case highlights that there are also methods which will fail when scrutinised. Care has to be taken to get the right advice to ensure that your rates mitigation strategy works.
The court was satisfied that this was an “overwhelming case” of a sham.