General Motors UK Ltd v Manchester Ship Canal Company Ltd [2016]:

Whether relief from forfeiture is available where claimant has proprietary or possessory rights

The background

The claimant’s car manufacturing plant is situated adjacent to the defendant’s canal. A licence was granted in 1962 by the defendant to the claimant permitting the claimant to discharge surface water into the canal. An annual sum of £50 was payable by the claimant to the defendant as consideration but the right was granted in perpetuity.

The £50 was not paid in 2013 and the licence terminated by the defendant. The parties proceeded to negotiate terms for the grant of temporary rights but they were unable to reach agreement and the claimant in the alternative issued a claim for relief from forfeiture.

The law

The claimant stated that it had a sufficient possessory right; the defendant argued that the court did not have jurisdiction to grant relief. Three questions were considered:

· whether the court had jurisdiction to grant relief from forfeiture;

· if it did, whether relief was appropriate in this case; and

· if it was, the terms on which relief should be granted.

The decision

The court reached its verdict on the basis that the claimant, although not holding rights sufficient to amount to possessory rights, that the right ‘came about as close to a possessory right as it is possible to imagine’. To conclude that the right was purely contractual was also not appropriate; the claimant’s right entitled it to indefinite, exclusive use of the water channel and it limited the defendant’s own rights in respect of the channel.

On considering the facts of the case, the court held that it had jurisdiction to grant relief from forfeiture of the claimant’s licence and the court duly granted such relief.

JB Leitch comments on the case:

“The decision in General Motors is significant in finding that the court may use its discretion in granting relief from forfeiture, both where claimants have proprietary or possessory rights but also where the claimant’s rights fall short of possessory rights but constitute more than purely a contractual right. It is likely that the case will go to appeal.