The legality of licence premiums
For decades, boatowners at Chelsea Yacht and Boat Company’s (“CYBC”) moorings were asked to pay a fee (a “premium”) for a mooring licence in addition to the company’s annual maintenance charge and market rate mooring fee.
Boatowners now contend that CYBC is not permitted to charge for a mooring licence in addition to the market rate mooring fee and that doing so is a criminal offence under Section 70 of the Port of London Act.
Our understanding is that CYBC is a mooring operator not a property business. It is licensed by the Port of London Authority (“PLA”) to perform the complex task of maintaining the services our houseboats depend on. The PLA permits it to charge a maintenance charge (equal to the company’s actual costs of maintaining the mooring) and a market rate mooring fee. The PLA takes just 20% of the mooring fee leaving CYBC with 80% as its fair return for operating the mooring.
The PLA licence makes no reference to CYBC being allowed to charge boatowners a premium for a mooring licence. By doing so, CYBC has modelled itself like a property business, able to make significant returns from the sale of long-term licences to moor on the PLA’s land but with no financial benefit for the PLA.
Surprisingly, the PLA has condoned this practice for years. Boatowners remained unable to challenge its legitimacy, since the PLA, despite being a public trust, is not subject to the Freedom of Information Act and doesn’t disclose the terms of its River Works Licences.
The boatowners eventually got hold of CYBC’s River Works Licence and have taken it to the High Court for determination as to whether CYBC is permitted to charge a licence premium on top of its annual mooring fee. The Court has also been asked to determine if doing so is a criminal offense.