When can a court grant relief from forfeiture? Is the jurisdiction confined solely to proprietary interests in land? Does it extend to possessory rights as well? Or is it available more widely?
Vauxhall Motors Ltd (formerly General Motors UK Ltd) v Manchester Ship Canal Company Ltd [2019] UKSC 46; [2019] PLSCS 202 concerned the loss of a licence to discharge surface water and treated trade effluent into the Manchester Ship Canal. The trial judge held that the rights were so nearly possessory that they engaged the jurisdiction. But the Court of Appeal decided that this was a step too far. However, it ruled that the rights were, in fact, possessory and that the licensee – who had forgotten to pay a £50 licence fee, resulting in the loss of rights worth more than £300,000 per annum – was entitled to relief from forfeiture.
The Supreme Court has upheld the decision. The canal company tried to persuade it that jurisdiction to grant relief from forfeiture was limited to proprietary rights – and did not extend to possessory rights over land. The company acknowledged that the courts were now prepared to grant relief from the forfeiture of possessory rights over chattels and other personalty. But it argued that the concept of “possession” had no single clear or settled meaning in relation to land. As a result, any change in the rules that apply to land would be a recipe for confusion and uncertainty in an area of the law where certainty commands a premium.
However, Lord Briggs, who spoke for the court, took the view that, if the concept of possessory rights had not caused damaging uncertainty in widely varied commercial contexts, encompassing ships, aircraft, trademarks, patents, video equipment and shares, there was no immediately obvious reason why it should do so in relation to rights over land. He embraced the definition of “possession” in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, which combined an “intention to possess” with “factual possession”, and said that it would be strange if equity’s reach was wider in relation to rights over chattels, and other forms of personalty, than in relation to rights over land.
But the court was not prepared to go any further than this. So it rejected Vauxhall’s suggestion that the equitable jurisdiction to grant relief from forfeiture should be extended to all forms of right to use property, so long as the right of termination was conferred to secure the payment of money or the performance of other obligations. The Supreme Court agreed that upholding Vauxhall’s argument would undermine the certainty and coherence of the law.
Did the rights granted by Vauxhall’s licence fall within the possessory class of rights in respect of which the court does have jurisdiction to grant relief? The Supreme Court agreed that they did. Vauxhall built, operated and maintained the infrastructure, and had been granted exclusive, perpetual use of it. Consequently, the licence was a very unusual one – and, as Lady Arden stated, was prevented from being a lease only because it had been granted in perpetuity. So it did not follow that relief from forfeiture would become available to every licensee who has rights over land as a result of the court’s decision.
Allyson Colby, property law consultant
