Proprietary and Possessory Rights and Relief from Forfeiture

In Manchester Ship Canal Company v Vauxhall Motors Ltd (formerly General Motors) [2018] EXCA Civ 1100 the Court of Appeal considered whether the court at first instance was wrong to decide that it had jurisdiction to grant relief from forfeiture where the contract did not confer any proprietary or possessory rights.

I have previously considered the High Court’s decision to grant relief from forfeiture where the judge was entitled to take account of the potential windfall to the appellant in granting relief, see here.

The Facts

The case concerns the grant of a licence to the Respondent (Vauxhall Motors) to discharge water and trade effluence into the Manchester Ship Canal. The licence was granted on 12 October 1962 for a fee of £50 per annum. The licence was granted perpetually on the condition that the Respondent continued to pay the annual fee. In 2013, the Respondent failed to pay the annual sum and the Appellant proceeded with forfeiting the lease. The parties attempted to negotiate a new licence, but the Appellant was only willing to grant a temporary right at a 900,000% increase. Unsurprisingly, the negotiations failed but the Respondent continued to exercise its rights under the forfeited licence. The Respondent issued proceedings for relief.

Granting relief, HHJ Behrens rejected the Appellant’s argument that the court had no jurisdiction to grant relief because the licence did not confer any proprietary or possessory rights. The Appellant also argued that the court ought not to grant relief owing the delay in applying and that if relief was granted it ought to be on terms that a modern licence fee be paid.

Proprietary or Possessory Interest

The court considered whether the licence granted possessory rights. The court considered the two elements to the concept of possession: (1) factual possession; and (2) intention to possess. The court concluded that the licence did confer a possessory interest and in reaching its conclusion, the court considered the Respondent’s responsibility for the physical construction of the infrastructure and its sole primary responsibility for its repair and maintenance.

The court concluded that the licence did not confer any proprietary interest to the Respondent.

Decision

Upholding the High Court’s decision to grant relief the Court of Appeal concluded that the judge at first instance did have jurisdiction. The High Court refused to interfere with the trial judge’s exercise discretion to grant relief outside of the time limit for application (analogous with s210 of the Common Law Procedure Act 1985). Finally, the Court of Appeal noted the trial judge’s entitlement to take account of potential windfalls in granting forfeiture.

What does the Judgment mean?

The judgment is important because it confirms the right to be granted relief in connection with other types of interest in land, such as a licence, but only where the contract confers proprietary or possessory rights. If these rights exist, then it is likely that the right to relief will be available.