Commercial Property – Relief against Forfeiture – can it apply to a Licence?

Red English telephone booth near a house

It has long been presumed that only Tenants of leases and not Licensees could obtain relief from forfeiture. The Supreme Court in a landmark ruling in the case of Manchester Ship Canal v Vauxhall Motors Ltd has just overturned this presumption.

The case considered whether the court had jurisdiction to grant equitable relief from forfeiture. By way of background, in 1962 a licence for the passage of surface water and trade effluent over land owned by the Manchester Ship Canal (MSC) was granted in perpetuity at a sum of £50 per annum. As the interest granted was of indefinite duration, it could not be a lease and was thus characterised as a licence. In 2013 Vauxhall failed to pay the £50 and MSC terminated the licence. By 2018 the value of the licence rights was in excess of £300,000 per year.

Vauxhall applied for relief against forfeiture of the licence. MSC argued that the jurisdiction to grant equitable relief from the forfeiture of rights relating to land is limited to rights which amount to a proprietary interest so that merely possessory rights, and thus, all rights conferred by licences are insufficient. The Supreme Court conceded that “these are formidable submission”’ but was still willing to find that forfeiture of the licence was permitted. 

The court observed that:

‘This may be illustrated in this case by the fact that the licence granted rights over MSC’s land very similar to, and indeed more extensive than, rights in the nature of an easement. It is common ground that an easement creates an interest in land, so that its forfeiture may be relieved against. There is no principled reason why the perpetual rights granted by the licence should not do.’

For information on relief from forfeiture in commercial or residential properties or commercial property litigation in general why not contact one of Alexander JLO’s expert lawyers and see what we can do for you?

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