UK: Licensees And Relief From Forfeiture

Last Updated: 1 October 2018
Article by Keith Conway

The stakes were high in The Manchester Ship Canal Company Limited v Vauxhall Motors Limited (formerly General UK Motors Limited) [2018] EWCA Civ 1100 where a landowner stood to gain in excess of £300,000 a year if the court decided that a licensee had no right to relief from forfeiture in respect of a surface water discharge licence.

Although critical of its reasoning, the Court of Appeal agreed with the High Court and concluded that the licensee had a right to relief from forfeiture, effectively reinstating its existing licence for which only a £50 annual fee was payable.


In 1962 the Manchester Ship Canal Company ("MSCC") granted a licence (the "Licence") to Vauxhall for the discharge of surface water and trade effluent from its plant at Ellesmere Port into the Manchester Ship Canal.

The Licence was granted in perpetuity in consideration of a payment of £50 per year, with no provision for any increase. It included a right for MSCC to terminate where the annual fee was in arrears subject to giving prior written notice to Vauxhall.

Vauxhall failed to pay the £50 annual fee which was due on 12 October 2013. After giving written notice, MSCC terminated the Licence on 10 March 2014. Vauxhall's immediate offer to pay the outstanding fee was not accepted. The parties then entered into negotiations for a new licence and, although terms were agreed by mid-2014 on a subject to contract basis, a fresh licence was not completed. In January 2015 Vauxhall put MSCC on notice that they intended to apply to the court for relief from forfeiture and went on to make the application in March 2015.

By the time the appeal was heard in April 2018 the evidence was that the value of the right to discharge water and trade effluent into the canal was in the region of £300,000 to £440,000 per year.

High Court decision

His Honour Judge Behrens decided that he had jurisdiction to grant relief against forfeiture and exercised his discretion in favour of such relief. He came to this conclusion assuming (without deciding) that the right of passage of water granted in the Licence is "about as close to a possessory right as it is possible to imagine".

The Court of Appeal's decision

MSCC's appeal was based on an argument that the court did not have jurisdiction to grant relief from forfeiture. Even if it did, the application for relief was made too late.

Did the court have jurisdiction to grant relief from forfeiture?

Giving judgment, Lord Justice Lewison held that relief from forfeiture is available only where possessory or proprietary rights are granted. He disagreed with the approach adopted by the judge in that:

  • He had focused on the question whether the right of passage of water was possessory when he should have considered whether the Licence, considered as a whole, granted possessory rights
  • By apparently extending the boundaries of the jurisdiction to rights which were "close to possessory", he was diverging from a substantial body of precedent

It was therefore necessary for the Court of Appeal to decide if the Licence granted Vauxhall proprietary or possessory rights.

It was accepted by both parties that the Licence did not create proprietary rights.

Lord Justice Lewison went on to identify the two elements of the concept of possession as factual possession (a sufficient degree of physical custody and control) and intention to possess (intention to exercise custody and control on one's own behalf and for one's own benefit).

He also stated that possessory rights need not be rights in land in order to support a right to relief from forfeiture and can include, for example, rights in infrastructure, or the airspace enclosed by infrastructure.

In this case, the terms of the Licence were such that possessory rights were granted. The Licence gave Vauxhall sole responsibility for the construction, maintenance and repair of the infrastructure. MSCC did not reserve any rights to use the infrastructure or to carry out works to it, unless Vauxhall were in default of its own obligations.

Taking those rights into account, the physical characteristics of the property and the intention that only Vauxhall would be entitled to use and maintain it, there was a sufficient degree of physical custody and control of the infrastructure (but not of the soil in which it was placed) having regard to the nature of the property and the manner in which property of that character is normally enjoyed.

It was also clear that Vauxhall intended to exercise its rights and fulfil its responsibilities on its own behalf and for its own benefit.

The conclusion that Vauxhall had possessory rights was not enough on its own to support a decision to grant relief from forfeiture. It was in addition necessary that MSCC's right to forfeit was intended to secure the payment of money or the performance of other obligations. This was clearly the case because the rights granted in the Licence were subject to the annual fee being paid and performance of the covenants contained in it. The termination right exercised by MSCC was available only if Vauxhall was in default.

Should the court have granted relief from forfeiture?

The Court of Appeal could not interfere with the Judge's decision unless he was wrong in principle and he had not made such an error.

There was no time limit by which Vauxhall was required to make an application for relief. Delay was a factor which could be taken into account but only where the delay had caused prejudice, which was not the case. Vauxhall did not issue proceedings promptly but MSCC could have made its own application to the court at any time after service of the termination notice and/or chosen to peaceably re-enter.

The Judge was also entitled to take into account the windfall which would benefit MSCC if relief from forfeiture was refused.


The case is a useful reminder that the right to relief from forfeiture is not necessarily limited to tenants.

Where commercially possible, it is advisable to include flexible "no-fault" termination provisions in licences, so that the licensor may end the contract without fear that the right to forfeit may be available to the licensee.

If — as is likely — it is also necessary to include provisions in a licence permitting termination for breach, the licensor should bear in mind that the licensee may have a right to relief, depending on the subject matter of the contract and all the circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions