The litigation in Vauxhall Motors Ltd (formerly General Motors UK Ltd) v Manchester Ship Canal Co Ltd [2018] EWCA Civ 1100; [2018] PLSCS 93 concerned a licence granting Vauxhall rights to construct and use a spillway to enable it to discharge surface water and treated trade effluent from its manufacturing plant into the adjoining canal. The rights were granted in perpetuity. But the licence was terminable for non-payment of the annual licence fee in the sum of £50.
Due to an oversight, Vauxhall failed to pay the amount due in October 2013, despite being requested and then reminded to pay – which led to the termination of the licence. On receipt of the termination notice, Vauxhall offered to pay the arrears, but the canal owner refused to accept payment. During the negotiations that followed, the canal owner priced the grant of fresh drainage rights at over £440,000 per annum. Did the court have the jurisdiction to grant Vauxhall relief from forfeiture instead?
The court’s jurisdiction to grant relief from forfeiture applies to contracts involving the transfer of proprietary or possessory rights” (The Scaptrade [1983] AC 694), and does not extend to “mere” contractual licences. But the High Court took the view that the right to pass water through the spillway came “about as close to a possessory right as it is possible to imagine”. Consequently, albeit hesitantly, the judge at first instance decided that he did have jurisdiction to grant relief from forfeiture.
The Court of Appeal took a different tack. It ruled that the trial judge ought to have kept within the established boundaries of the jurisdiction. Consequently, before it could grant relief, the court needed to consider whether the licence granted proprietary or possessory rights.
Once constructed, the infrastructure had become part of the canal owner’s land. However, Lord Justice Lewison, who spoke for the court, stated that the fact that Vauxhall did not have a proprietary interest did not mean that the carmaker did not have any possessory rights. Furthermore, such rights need not be rights over land in order to attract the jurisdiction to grant relief against forfeiture. Possessory rights in the infrastructure, or even in the airspace enclosed by the infrastructure would suffice.
Lewison LJ explained that the concept of possession involves two elements: (1) a sufficient degree of physical custody and control; and (2) an intention to exercise such custody and control on one’s own behalf and for one’s own benefit: J A Pye (Oxford) Ltd v Graham [2002] UKHL 30. Vauxhall was responsible for the construction and maintenance of the infrastructure and controlled physical access to it from the landward side, as well as the use of it. Vauxhall had granted others rights of use, but no one else had any possessory rights over it, and the canal owner had agreed not to interfere unreasonably with the maintenance and operation of the infrastructure.
Consequently, Vauxhall had sufficient physical custody and control to lay claim to rights that were possessory in nature. Furthermore, it plainly intended to exercise those rights on its own behalf and for its own benefit. Therefore, the court did have jurisdiction to grant relief in this case and the trial judge’s decision to do so was upheld.
Allyson Colby, property law consultant
