#5348 - Licences And Proprietary Estoppel - Land Law

Licences and Proprietary Estoppel

A. Bare licences

A bare license is a simple permission to enter land which can be terminated by telling the licensee to leave. Granting a license by deed makes no difference. The licensor must allow reasonable time to leave, which may vary from a matter of seconds to even months where a dwelling home is concerned; generally a ‘packing up’ period will suffice. They may subsequently be protected by estoppel or constructive trust. This will not be the effect of the bare license itself, but rather of other circumstances

B. Licences coupled with an interest

Proprietary interests frequently require access to land in order to be effective e.g. right to take things from the land of another. It is plain that in order to take a profit from the land of another, then access to that land will be required. The law has always regarded this license of having the same enforceability as the profit or other right to which it is attached. The interest may be in a chattel on the land rather than the land itself, although in most cases the chattel has been something which was originally part of the land e.g timber or crops.

C. Contractual licences

The effect of licenses created by contract has given rise to much debate and difficulty. The availability of equitable remedies for breach of contract has fuelled the argument that contractual licenses mat have greater effect than the mere revocable personal permission recognised by the common law. A significant analogy lies in the history of restrictive covenants: it was the willingness of the courts to give equitable remedies that lay at the heart of their recognition as proprietary interests in Tulk v Moxhay. The orthodox 19^th Century position was that a licensor could terminate a license even if doing so was in breach of contract; the licensee might have a remedy for breach of contract but that was all. Recently mechanisms of protecting the interest have been developed, but the right still technically remains personal; strength of protection depends on the mechanism used.

1. Establishment

• Tanner v Tanner [1975] 1 WLR 1346: D bought a house (on mortgage) for P & his children to live in; P left her old flat and moved in. P later offered D money to move out but she refused claiming a right to live there until the children had left school. P purported to terminate the license and brought possession proceedings. Denning MR:

  • Where there is good consideration then it may be implied that there is a contractual license; seems to think that the consideration here is giving up flat where she had protection of the Rent Acts.

  • If licence had been granted without consideration at all then could have been revoked at short notice.

  • Note that implied licence was not actually pleaded but the court thought fit to decide that there was one; would have been terminated in the event that she remarried; if not, then until the children left school.

  • Damages may be awarded to reflect expectation or estimated payment for surrender of licence.

• Chandler v Kerley [1978] 1 WLR 693: P (new partner) but matrimonial home from H (D’s former partner). Relationship between P & D ended, and so P purported to terminate D’s licence. Lord Scarman:

  • D had given up her part of her share in the profits of the sale of the home as consideration that she could live there; the licence was therefore a contractual one.

  • Where the parties have contracted for a license, that will be protected by an equitable remedy.

  • In absence of an express stipulation thought that it was unfair to impose the burden of D and her children upon P for life; decided that the contractual licence was terminable on reasonable notice (12 months).

2. Effect on licensor

If a license is to have any chance of being a proprietary interest binding purchasers it must first be irrevocable by the licensor. The position as between licensor and licensee is both significant and disputed. Equity may intervene in such cases in one of two ways:

1. There may be specific performance of the contract, and;

2. Equity will prevent the licensor from revoking the license in breach of contract.

• Winter Garden Theatre v Millenium Productions [1946] 1 All ER 678 (CA) and (HL): A granted M licence to use theatre for 6 months with option to continue foe further 6 months upon payment of increased rent. There was no express provision as to A’s right to terminate, but there was in relation to M. A tried to terminate.

  • Lord Greene (CA):

    • Question of whether or not a licence is revocable will depend upon the terms of the contract.

    • General rule is that before equity will grant an injunction there must be, on the construction of the contract (according to ordinary principles) , a negative clause express or implied; seems that giving option to continue implies a negative obligation not to revoke the licence.

  • Viscount Simon (HL):

    • A licence granted may fall into a number of classes:

      • Purely gratuitous: Revocable, subject to allowance of reasonable period for leave.

      • Licences for value: Can have payment once and for all, periodic payment, or value which constantly occurs (e.g. sale of a ticket to view particular event).

  • Lord Porter (HL):

    • Implicated agreement with idea that licences given for consideration should not be revocable once the performance of the act has begun.

    • However, thinks there is an important difference between saying that a limited and temporal licence may remain in force until fulfilled and admitting in general terms that once a licence is given it can never be terminated; the latter is against all historical accounts of licences.

  • Lord Uthwatt (HL):

    • Settled practice is that equity will do all it can by way of injunction to protect a bargain.

    • Propositions of law made by Lord Greene are unanswerable.

  • NB: House of Lords thought that on proper construction of the contract was a revocable licence.

• Hounslow LBC v Twickenham Garden Developments [1971] Ch 233 at 242F-255A: C entered into building contract with D, who commenced work. C was unhappy with the work and so sought to terminate. Megarry:

  • Licence is a contractual licence if it is conferred by contract, irrespective of whether the right of entry was a primary or secondary purpose of that contract; it is not distinct from the contract which created it;

  • Willingness of a court to grant equitable remedies to enforce such a licence will depend on whether or not it is specifically enforceable; although may be protected by doctrine of licence acted upon.

    • This latter point comes from Lord Porter in Winter Gardens (above).

  • Even if not specifically enforceable, the court will not grant equitable remedies in order to aid or procure a breach of contractual licence.

• Verrall v Great Yarmouth BC [1981] QB 202: Change of political power resulted in Labour trying to revoke previously granted licence to National Front to hold political conference at the pier; no current possession.

  • Lord Denning: Winter Gardens decided that once a man has entered under his contract of licence he cannot be turned out; injunction can prevent that. Thought that no difference in principle even where possession had not yet taken place; if he has a right to enter, will be protected by injunction/sp.

  • Roskill LJ: Thought duty of the court to appropriately protect deserving interests in equity.

  • Held that council had to allow performance; Denning also noting importance of fundamental freedoms.

See also Bruton v London & Quadrant Housing (below). Also note that court will not enforce an agreement for two persons to live peaceably together (Thompson v Park), or where co-operation is required for performance and that building contracts are not usually specifically enforceable. English analysis is that equity will enforce an agreement for short term interests rather than long.

3. Effect on third parties

• King v David Allen [1916] 2 AC 54: D gave P permission to affix posters to a wall to be constructed by him. Control of the company was passed to another without reference to the agreement; new owner refused to execute.

  • A licence creates no estate or interest in the land, nor an easement to which the land will be thereafter subject; a contract creates a personal obligation only, which may sound in damages (did here).

• Clore v Theatrical Properties [1938] 3 All ER 483: Lease of front of house rights to sell refreshments at a theatre was given to P. Assignee then took over such matters and refused the licence to continue. Lord Wright:

  • Affirms that a licence creates no estate and is personal only; means that can only be enforced as against those who are privy to the contract.

NB: These early cases stand as high authority that contractual licences do not bind subsequent purchasers. However there are two noticeable weaknesses in relation to them which must be noted:

1. Neither of the cases involved full or exclusive possession of land. One may argue that where a person does have full or exclusive possession then their rights are more deserving of proprietary status;

2. Both cases pre-date the discussion in Winter Gardens.

• Errington v Errington [1952] 1 KB 290: L bought house for S & Daughter-in-law and told them that he would transfer the property to them when they had paid off the mortgage (2/3 price). L died, and the widow later sought possession when S deserted the Daughter-in-law whom continued making payments as directed.

  • Hodgson LJ: Saw the agreement in terms of a unilateral offer which could not be revoked when the consideration was executory; would only be terminable when she...