In the case of Manchester Ship Canal Company Ltd v Vauxhall Motors Ltd the Supreme Court held that the licensee was entitled to relief from forfeiture.
This case is relevant to residential licensees because many are likely to have some form of possessory title and therefore are likely to be able to avail themselves of the right to relief from forfeiture granted by the Supreme Court in this case.
What is interesting is that this case appears to suggest that Licensees’ have rights above and beyond those of an assured shorthold tenant. This decision is binding on the lower courts and as such licensee’s facing eviction are now able to issue proceedings for relief from forfeiture in the hope that the courts will again exercise their discretion and permit them to continue their occupation under their licence.
Relief from forfeiture
Relief from forfeiture allows a tenant whose lease has been terminated, especially for rent arrears, to ask the court for the lease to be reinstated on resolution of the problem which led to the forfeiture. Compensation to the landlord is also usually due.
It is important to note that relief is not granted to those who hold an assured shorthold tenancy because a breach of a tenancy in this case is dealt with using statutory powers set out in the Housing Act 1988.
Vauxhall Motors (VM) were granted a licence by Manchester Ship Canal Co (MSCC) to discharge surface water and treated effluent from their plant into the Manchester Ship Canal. The rights were granted forever (perpetuity) in exchange for an annual payment of £50 and the performance of certain conditions and covenants, including construction, maintenance and the operation of other works.
In 2013, VM failed to pay the annual £50 and MSCC terminated the licence pursuant to clause 5. Negotiations for a new licence failed so VM issued proceedings for relief from forfeiture.
Contrary to expectations the Supreme Court held that the right to relief from forfeiture applied to some licences. It had previously been thought that this would only apply to Common Law tenancies. However, on the particular facts of this case the level of control that VM had over the land and its use elevated their rights to the same level as those that would normally be available to a tenant. Therefore, the Supreme Court held that it was just and appropriate to grant VM similar protection of their rights as would be obtained by a tenant.
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