Landlord, oil company and petrol station licensee

An oil company does not acquire the status of the statutory tenant of the land where the petrol station is located

The Rent Control Law 23/83, as amended, does not include the term ‘tenancy’, the lease of land used as a petrol station, and explicitly excludes it. As a result, lease agreements between oil companies and land owners regulate their relationship and the Rent Control Law is not applicable. The status of a licensee of a petrol station as a user under a licence agreement between them and the oil company does not create a relationship with the owner of the land.

In the event that a lease agreement expires or is terminated, if the company and licensee remain in possession of the land, they are considered trespassers. They do not have any protection under the law and the court will issue an order for them to surrender the property and its free possession and an order to pay damages equal to its rental value for as long as the unlawful possession lasts.

The licence agreement between oil company and licensee regulates their relationship and the relevant reservation in the term ‘tenancy’ in the law provides protection to the licensee only against the company in case of a dispute between them and not against the property owner. Any dispute between owner and oil company based on the civil offence of trespass constitutes unlawful possession on the part of the licensee too. The relationship between owner and oil company is terminated upon the expiration of the lease agreement and the licensee does not have any right regarding the property or its owner.

In a judgment issued on September 27 the Supreme Court adopted the findings and the judgment of the court of first instance that the lease agreement of the land expired and ceased to be valid. The court confirmed the correctness of the order issued against both oil company and licensee of the petrol station to hand over the land and its free possession to the owner, as well as to pay damages to him for the loss of its use.

The lease agreement concerned the contractual relationship between owner and oil company and the licensee did not derive any right from it. The oil company and the licensee alleged that the court of first instance wrongly decided to issue the order against the licensee given that the issue and the relationship of the licensee is governed by Law 23/83 and falls under the jurisdiction of the Rent Control Law. The Supreme Court did not agree, emphasising that from the wording of the relevant provision it is clear that the legislator never intended the licensee to be included in the meaning of the term ‘tenant’.

The court added that the relevant provision in the reservation creates a special right providing protection to the licensee of a petrol station in the event of a dispute between them and the oil company. Such protection is provided if their dispute is limited to the aspects of their relationship that are explicitly defined in the reservation, the right of possession of the petrol station and the consideration.

In the particular case, the court did not have to consider any such dispute. The lawsuit concerned trespass by the company after the expiration of the lease agreement. The licensee was not the tenant and after the expiration of the lease agreement, the possession of the property became unlawful by him as well. Both company and licensee were jointly and severally liable for the civil offence of unlawful interference, as well as for compensation payable and the court dismissed the grounds of their appeals.

With regard to the owner’s refusal to accept the two cheques the oil company sent her as rent for the first two years of the illegal possession of the property, the Supreme Court held that their non-acceptance was reasonably justified. If the owner accepted them, an additional dispute could arise, as the cheques had been given by the company as rent apparently in an attempt to create a legal effect, in order to argue that the lease agreement had been renewed upon their acceptance.

George Coucounis is a lawyer practicing in Larnaca and founder of George Coucounis LLC, [email protected]