Behind the Bar: Star Pubs v Gunmakers Arms

In this episode, Richard and Lizzie unpack the County Court’s decision in Star Pubs Trading Ltd v Gunmakers Arms (Essex) LLP and what it means for landlords, tenants, pub operators, and commercial property lawyers.

The court ruled that Star Pubs could successfully oppose lease renewal under Ground G of the Landlord and Tenant Act 1954, despite day-to-day pub operations being carried out by a third-party contractor.

Why? Star Pubs still controlled the pricing, branding, contracts, marketing, and overall retail strategy. The business, legally speaking, remained theirs.

Richard explore’s what “occupation for your own business” really means in modern commercial leasing, why physical presence is not the deciding factor, and how this case fits alongside authorities including Humber Oil Terminals Trustee Ltd v Associated British Ports, S Frances Ltd v Cavendish Hotel (London) Ltd and Royal Borough of Kensington and Chelsea v Mellcraft.

Relevant cases:
Humber Oil Terminals Trustee Ltd v Associated British Ports [2012]
Cunliffe v Goodman [1951]
S Frances Ltd v Cavendish Hotel (London) Ltd [2012]
Dellneed Ltd v Chin (1987)
Brumwell v Powys County Council [2011]
Teesside Indoor Bowls Limited v Stockton-on-Tees Borough Council [1990]
Graysim Holdings v P&O Property Holdings [1996]
Royal Borough of Kensington and Chelsea v Mellcraft [2024]

Training & Free Webinars for Property Professionals:

Would you like to keep up to date with the latest in real estate law? Davitt Jones Bould offers legal training tailored to your organisation’s needs, delivered in person across the UK or remotely. We also run free monthly webinars through for surveyors, solicitors, and property professionals across sectors. To sign up or learn more, visit our events page here or email djb.events@djblaw.co.uk for information and booking. 

This podcast is for informational purposes only and is not intended to provide legal or professional advice. No liability is accepted by Davitt Jones Bould for any reliance placed on its content.

Transcript

Lizzie Collin
Welcome back to the Unpacking the Case podcast. This week we're heading to the pub, but unfortunately not for a relaxing pint. We're looking at the recent decision in Star Pubs Trading and Gun Makers Arms. A case that asks a surprisingly complicated question. Do you actually need to be physically running a business from premises to count as occupying them for your own business purposes under Ground G of the 1954 Act? In this case, Star Pubs weren't behind the bar pulling pints themselves, but a third party operator was handling the day-to-day running of the pub. The court still found the business was effectively Star Pubs' business because they retained significant control over pricing, contracts, marketing, and the wider retail model. Today, we're unpacking what counts as own occupation, why control matters more than physical presence. and what this means for landlords and tenants going forward, particularly in sectors like pubs, hospitality and retail, where outsourced operating models are increasingly common. Hi Richard.

Richard Snape
Hello Lizzie, it's a hot day today.

Lizzie Collin
It is a hot day and we were just discussing how we've both spent the long weekend in the pub and now we're going to talk about pubs which is quite fitting for just after the bank holiday. So we're talking about a new case from the county court from the 2nd of April called Star Pubs Trading Limited and Gun Makers Arms Essex. And it's all about ground G of the Landlord and Tenant Act 1954, occupation for your own purposes, and also management services agreements. So do you want to tell us the background?

Richard Snape
Yes, it's the Gun Makers Arms in Loughton, which I think is around Epping Forest in Essex. And the landlords were, well, our star pubs who used to be the Punch Partnership and a part of Heineken. big, big, pub owners. And they, the pub itself, the lease was from, it was from January of 20, 2005, a 20 year lease, which the gun makers arms seemed to have taken assignment of the lease around 2012, but it was coming to an end, or came to an end in January, the fixed term was due to come to an end on January of 2025, but in March of 2024, the landlords served a section 25 notice opposing a new lease on Ground G, that they wanted to occupy the pub for their own purposes, intend to occupy the holding for the purpose of or partly for the purpose of a business carried on by them. And that was what it was primarily about. What the twist was, Lizzie, was that the landlord had an intention, which is quite common on the pub industry and the sort of hospitality industry, to not actually carry out the management of the pub themselves. It's we're going to use a management services agreement and they didn't have anybody in line at the moment, but they would find somebody else to actually do the management. And it's called something called just add talent. The people doing the management will find the staff and the employees, but nothing much else. They won't take on the sort of financial risks involved and they won't enter into commercial contracts apart from the employees being recruited. And do they intend to occupy for their own purposes? Do you start pubs or not? Or is it going to be occupied by the We just add talent to people. And that's basically what it was about.

Lizzie Collin
And so what happened when I went to court?

Richard Snape
Well, they pointed out the sort of fairly obvious. They used ground G, just like ground F. It's A two-stage process. You have to show a genuine intention to occupy for your own purposes and a real chance, a real prospect to bring that about. The first is subjective, the second objective. They quoted Royal Terminals and Associated British Ports from 2012. They didn't quote my favourite, Cunliffe and Goodman, which was actually not about the 54 Act, which said that the intention must be, it was a 1951 case, about dilapidations claims, but it's got to be out of the zone of contemplation and into the valley of decision. And they didn't mention the fact that there's also a but for test after S. Francis and Cavendish Hotel. would you still want to do this? But for the fact, the tenants were an occupation, if you like, is it just a way of trying to be rid of them? Whether that was a ground death case, it's equally applicable. And they basically discussed 3 cases, a couple of which weren't exactly to the point, which is the court. The first was a case called Delmead and Chin from 1987, which in its own little right, in its own little way was very significant at the time. Where Delnead was paying, it was a Chinese restaurant and Delnead was paying what was called a management fee to Chin. The idea is they had a three-year agreement and ostensibly Chin would sort of train up the people Delnead and that was held to be a lease. You would genuinely occupy in those circumstances and this management agreement was actually a weekly tenancy. And there was another case, not exactly to the point, Bromwell and Powys County Council, which all took place in Rhiodar in Mid Wales, which you'll be familiar with. Your numerous trips to Wales, Lizzie.

Lizzie Collin
I've been to Wales a few times, but as you know, Welsh pronunciation and geography is not my strong suit.

Richard Snape
But it was a caravan park and the council were the owners of the caravan park. Brumwell was basically a warden taking part in the everyday business. The council had a substantial degree of control of the caravan park and that was held not to be a lease, but they were both about whether the 54 Act applies in the 1st place. Are you occupied under a lease? But there was another case, a Court of Appeal case in 1990 called Teesside in Door Bowls and Stockton on Tees Council, which was basically the council wanted to sort of occupy it to third parties again. And it was held they could use ground G there. It's a question of degree. They also quoted the House of Lords case in 1996, great some MP&O, which again was about whether the 54 Act applies or not and not whether you're occupying the premises. That was covered market and Wallasey in Merseyside, 30 market stalls. And amongst other things, the House of Lords in that case said that occupation isn't necessarily physical control and it's not the same as possession. It's determined by the degree of occupation. So if you've got a sublease, with a few exceptions, almost certainly it's the sub-tenants who are in everyday control of the premises, a bit like Delnead and Shin. And so they discussed all these kind of things and because all that the management services agreement did was basically allow the managers to decide on who the staff were, then it was still intended that star pubs would occupy the premises. And so they succeeded. It's an interesting one though.

Lizzie Collin
It is indeed. And why is it important, do you think?

Richard Snape
Well, I mean, I got to say. There's other cases which weren't even discussed. They're not exactly to the point, but you remember we did a case on it a couple of years back in 2024, Kensington and Chelsea Borough Council, Melcraft, Portobello Road, where the council wanted to occupy the premise or claim they wanted to use Ground G because they wanted to put homeless people in on licenses under their obligations under the Housing Act, 25 Housing Act to temporarily house homeless people pending a decision as to whether they have to be permanently housed. And in that case, the court decided that there wasn't so any management service agreement, but they decided that the people in occupation in that circumstance would have been the homeless people. And so you couldn't use Ground G. And I know it's different, but I'm not sure how it's so different. But it's important. It's only a county court case. But it is important in terms of a lot of these management service agreements in the hospitality and leisure sector and the likes that, A, you're not necessarily granting occupation to, under a 54, at least in the 1st place, but primarily these management services agreements, which are used quite a bit, still mean you can use ground G.

Lizzie Collin
Thank you. Unfortunately, we're not off to the pub to celebrate the end of that episode, but the sun is still shining.

Richard Snape
Speak for yourself, Lizzie.

Lizzie Collin
Thanks very much, Richard.

Richard Snape
Thanks, Lizzie.