#17394 - Licenses - Property Law

Licenses

Licenses create a PERSONAL RIGHT only therefore not binding of third parties.

National Provincial Bank v. Ainsworth (1996) – Mrs. A had permission to occupy the former matrimonial home which was solely in her husband’s name- her right applied only to her husband, was a license- could not bind the bank as it was a third party, had acquired legal charge.

Thomas v Sorrel (1673)- no proprietary rights arise under a license, but it will confer legality on action.

Bare Licenses

Key features:

• B has a liberty to use A’s land (and so is not under a duty to keep off).

• A is not under a duty not to revoke that liberty so can be revokes at any time.

Contractual Licenses

GENERAL PRINCIPLE: a licence granted expressly or impliedly in return for valuable consideration.

Key features:

• B has a liberty to use A’s land.

• A is under a contractual duty not to revoke that liberty (and B has a corresponding claim-right against A).

• KEY RULE: not an interest in land, must not be made in writing to comply with s.2 LP(MP)A 1989

What happens if A revokes or threatens to revoke a contractual licence?

Two questions to ask:

• Is A’s actual or threatened conduct a breach of contract?

  • Is licence for a fixed period or not? (Winter Gardens Case)

• How will the courts respond to a breach by A?

How will the courts respond to a breach by A?

1. Can B get an injunction against A?

If A threatens to revoke the licence in breach of contract, it may well be that B can persuade the court to grant an injunction to prevent the breach:

Verrall v Great Yarmouth BC [1981] QB 202 (CA)- Great Yarmouth BC owned hall. Made promise to allow National Front to use it for conference. New labour government took over, wanted to revoke the licence. Could the license be revoked? No, once a man has entered into contract, they can’t withdraw. Specific performance must be granted. Considered licence to be ‘interest’ in land.

But note that specific protection of the contractual licence will not always be suitable. See e.g. Thompson v Park [1944] KB 408 (CA): Two schools amalgamated under license to form one school. Relationship between headteachers broke down, Thompson attempted to revoke the licence. Having left, Park forced his way back on property and refused to leave. Thompson asked for injunction. Could injunction be granted? Yes, the court cannot, and will not, force two people to live peacefully under the same roof, this would be onerous.

“the court cannot specifically enforce an agreement for two people to live peaceably under the same roof”.

2. Does A’s revocation of the licence turn B into a trespasser?

Unless permitted by the contract, no: Hurst v Picture Theatres Ltd [1915] 1 KB 1 (CA).- H forcibly ejected from a cinema even though he had a ticket- held that if a license is coupled with a grant of an interest it is not revocable by licensor but a mere license can be revoked at any time.

See also Hounslow LBC v Twickenham GD Ltd [1971] 1 Ch 233, 254-5- Builder allowed into occupation of land for 4-year period to carry out building work with council. Council wanted to bring contract to end without notice. Builder refused to leave. Could council obtain injunction? No, Contractual licensor cannot become trespasser, regardless whether the contract is specifically enforceable or not.

(Megarry VC):

‘[I] find it difficult to see how a contractual licensee can be treated as a trespasser so long as his contract entitles him to be on the land; and this is so whether or not his contract is specifically enforceable. I do not think that the licence can be detached from the contract, as it were, and separately revoked; the licensee is on the land by contractual right and is not a trespasser.’

1. Contractual licences – B’s rights against X

The question

If A grants a contractual licence to B and then X interferes with B’s use of the land, does B have a right against X? And if so, how does that right arise?

Bare licences – if B, has exclusive possession of the land, then even if B has only a licence from A, the fact of possession gives her a property right, which allows her to bring a claim against a trespasser such as X.

See e.g. Lord Upjohn in National Provincial Bank v Ainsworth [1965] AC 1175 at 1232:

“In this case in truth and in fact the wife at all material times was and is in exclusive possession of the home. Until her husband returns she has dominion over the house and she could clearly bring proceedings against trespassers.”

Contractual licences – what if X interferes before B takes possession of the land? Does the fact that the licence is contractual give B any extra protection against X?

Manchester Airport v Dutton [2000] QB 133: National Trust owned land next to Manchester Airport, gave airport a licence to cut down trees to build a new runway protestors occupied – airport applied for court order to force them to leave – court granted possession to the airport, allowed them to assert a right against a third party even though they had not taken exclusive possession.

A X: goes on to the land before B

A’s contractual

promise to allow B

to go on to the land

to remove trees

B Can B assert a right against X?

In Dutton, B had not yet gone into possession of the land – did that matter?

According to the majority (Laws and Kennedy LJJ), this did not matter: - Tutor disagrees with him but= binding but not defensible as a matter of principle. Possible reasoning for judgement- Public policy, don’t want protestors to keep doing that plus people who have paid (have a license) subject to random people who just go in before them. -Reasoning backwards.

“The true principle is that a licensee not in occupation may claim possession against a trespasser if that is a necessary remedy to vindicate and give effect to such rights of occupation as by contract with his licensor he enjoys. This is the same principle as allows a licensee who is in de facto possession to evict a trespasser. There is no respectable distinction, in law or logic, between the two situations.” (also Mayor of London v Hall [2010] EWCA Civ 817)

But cf the dissenting judgment of Chadwick LJ: - Tutor agrees with him.

“[The judge should have made] the distinction, essential in cases of this nature, between a plaintiff who is in possession and who seeks protection from those who interfere with that possession, and a plaintiff who has not gone into possession but who seeks to evict those who are already on the land. In the latter case (which is this case) the plaintiff must succeed by the strength of his title, not on the weakness (or lack) of any title in the defendant.”

The majority judgment was endorsed by Lord Neuberger MR (obiter) in Mayor of London v Hall [2010] EWCA Civ 817.

2. Contractual licences – B’s rights against C

The question

If A grants a contractual licence to B and then sells the land to C, does B have a right against C? And if so, how does that right arise?

Two possibilities:

1. B has a pre-existing property right which she can assert against C.

2. C behaves in such a way as to give B a new direct right.

The starting point

A contractual licence does not count as a property right in land – it confers a personal right only on B: King v David Allen [1916] 2 AC 54 (HL).- DA granted K a contractual licence to put up posters and ads on a cinema wall – cinema sold, new company refused the right to put up posters – held that the licence was a purely personal right – only enforceable between the parties to the contract –not a proprietary right.

Earl Loreburn, 62:

“But we must look at [the agreement between A and B], and it seems to me that it does not create any interest in land at all; it merely amounts to a promise on the part of [A] that he would allow the other party to the contract to use the wall for advertising purposes, and there was an implied undertaking that he would not disable himself from carrying out his contract.”

Something to think about: in light of what you have learned already about the numerus clausus principle and the LPA 1925, do you think there are good reasons for treating contractual licences as personal rights only?

The position after the LPA 1925

S. 4(1) of the Law of Property Act 1925:

“...after the commencement of this Act (and save as hereinafter expressly enacted), an equitable interest in land shall only be capable of being validly created in any case in which an equivalent equitable interest in property real or personal could have been validly created before such commencement” (see Briggs [1983] Conv 285, 290)

Lord Denning MR’s proprietary analysis

Errington v Errington [1952] 1 KB 290 (CA): man purchased land for son and daughter-in-law, said they could have it if they paid the mortgage instalments – these constituted 2/3 of the purchase price, it would be theirs when the mortgage was paid – father died, son left the wife – house transferred to the mother who attempted to recover possession from the wife – held that the contractual licence of the wife was binding on the mother i.e. the successor in title KEY OPINION: Lord Denning – notice of the licence made it binding on purchasers NOTE: HoL refused to enforce this in National Provincial Bank Ltd. v Ainsworth.

Lord Denning MR decides that:

• a court of equity is likely to protect B’s contractual licence by means of specific performance or an injunction;

• that means that B has a right to stay on the land for the duration of the licence; and

• that means that the contractual licence is an equitable interest in land; and

• therefore the licence is prima facie binding on C.

In National Provincial Bank v Ainsworth [1965]...