Relief from forfeiture: Exclusive possession and control of property by a party holding only a licence of property (Manchester Ship Canal Co Ltd v Vauxhall Motors Ltd, 2019)

Where a licensee held a licence of property but enjoyed almost exclusive possession and control over it, did the licensee hold sufficient possessory rights to benefit from a claim for relief from forfeiture?

The background

In Manchester Ship Canal Co Ltd v Vauxhall Motors Ltd [2019], the appellant owned the Manchester Ship Canal and adjoining land in Ellesmere Port, Cheshire. A large site was occupied by the respondent vehicle manufacturer and in 1962, Vauxhall also bought land from the appellant in order to collect, treat and discharge surface water and industrial effluent. A licence, subject to a £50 per annum ‘rent’, was granted in perpetuity by the appellant to the respondent for the discharge of surface water and treated effluent into the canal, including the grant of rights to construct pipework and so on to allow the discharge (termed the ‘spillway’).

From 2013, Vauxhall failed to pay the £50 annual rent and the appellant served notice annually to terminate the licence. The appellant company failed in its efforts to agree a market rate licence fee (or ‘rent’) with the respondent. Vauxhall brought a claim for relief from forfeiture which was granted initially, supported by the Court of Appeal, finding that the rights granted to Vauxhall were very similar to possessory rights and that therefore Vauxhall even as a licence-holder was entitled to claim for relief.

The decision

This matter has been decided by the Supreme Court, which concluded that Vauxhall did enjoy sufficient possessory rights to therefore be entitled to claim successfully for relief from forfeiture.

Vauxhall enjoyed possession and control of the spillway, which was an integral part of Vauxhall’s land and infrastructure, which had also been built, operated and maintained by Vauxhall, who enjoyed rights in perpetuity.

Advice and action

The licensee’s entitlement to claim relief from forfeiture is of interest to our residential management and commercial clients. The Supreme Court decision concludes that a party may enjoy sufficient possessory rights to claim relief from forfeiture, even where a licence is in place but no lease.

It is possible for the licence and the way a property is used to confer, or imply to confer, exclusive possession on a licensee which is exercising control over a property. Landlords are therefore advised to ensure adequate legal advice is obtained prior to grant of a licence, and that a property is appropriately monitored during the licence period, to ensure that a licensee’s opportunities to claim exclusive possession or control are minimised.