Licences

Question 1

Introduction

1. how should they be categorised?
2. why not accord proprietary status to them?
3. what is one way forward in terms of according proprietary status?

Answer 1

1. There is a huge variety of rights enjoyable under a license, which makes it difficult to consider them as a single category.
2. Many categories are difficult to enforce which means it’s difficult to accord proprietary status to licenses
3. Cases haven’t differentiated according to license type, but one way forward is to give greater protection to certain types of licenses (eg. those involving exclusive possession)

Question 2

Bare license

1. Created
2. How Terminated?
   - is this different where it is a person’s home?
3. Definition
4. Effect on purchasers

Answer 2

1. expressly/impliedly
2. Telling the licensee to leave, but granting a reasonable time to leave (perhaps months where the licensee’s home is involved)
3. A simple gratuitous permission to enter land
4. Sale by licensor will likely be treated as implicit termination of the license (analogy with tenancy at will) but at any rate purchaser can terminate it

Question 3

Licenses coupled with an interest

1. Created
2. How Terminated?
3. Definition
4. Effect on purchasers
5. Example

Answer 3

1. Implied into proprietary interests that require entering onto land
3. Permission to enter another’s land for exercising a proprietary interest (eg. a profit) that can be in a chattel (Webb v Paternoster) or in the land itself
4. Binding
5. Hurst v Picture Theaters Ltd: C was watching a film in D’s cinema and D evicted him in breach of contract and C sued for assault having to prove that he had a right to be on the premises. CoA said there was a license coupled with an interest, though this is controversial because there was no proprietary interest, only a contractual right to watch the film.

Question 4

Contractual licence

1. Created (any formalities necessary?)
2. How Terminated?
3. Definition
4. Effect on purchasers
5. Example
   (Hardwicke v Johnson)

Answer 4

1. Failed leases, family living arrangements etc. (no formalities necessary) – can also be assigned without formalities
2. Cannot be revoked by breach of contract. Does not bind purchasers so will terminate on sale. Can also terminate if the other party breached the contract (as Equity will not assist them)
3. A permission to enter land created by contract
4. Probably not binding.
5. Hardwick v Johnson: a mother allowed her son and daughter-in-law to occupy a house for paying £7 a week towards purchase price (though the sum amounted to a mere 3%). CoA held that mother couldn’t regain possession when the son left the daughter-in-law. There is little justification save the contract for the license to continue indefinitely.

Question 5

Estoppel License

1. Created
2. How Terminated?
3. Definition
4. Effect on purchasers

Answer 5

1. As it is equitable and proprietary it must be in writing (s53(1)(a), (c) LPA 1925)

2.

3. A license that arises on the detrimental reliance of the licensee
4. Binding.

Question 6

iii. Contractual Licenses

I. Is it revocable by the licensor?

1. why this matters in terms of the contractual licence being proprietary?
2. 19th century approach
3. Buckley LJ
4. Problems with Buckley’s analysis?
5. today’s approach - 3 cases

Answer 6

1. If it is to have any chance at being proprietary (binding purchasers), it first has to be irrevocable by the licensor
2. Orthodox 19C approach: Wood v Leadbitter – licensor could always terminate a contractual license even if it would be in breach of contract because the license is seen as separate (Hurst therefore had to use the license coupled with an interest analysis to make it irrevocable)

3, But in Hurst Buckley LJ said that a license with an agreement not to revoke also worked, because Equity will intervene:
o Specific performance of the contract
o Or prevent the licensor from revoking the license in breach of contract
o So because an Equitable remedy is available Equity will treat the licensee as having a right to remain should the licensor evict him

4. Problem with this analysis: Equity is acting retrospectively – Hurst had no opportunity to seek a remedy before eviction. But Equity nevertheless treats him as if he had obtained an injunction preventing eviction, which is the ordinary approach where there has been an interest in land and there’s no reason why it shouldn’t be applied to licenses
5. Today’s position: Winter Garden Theatre v Millenium Productions – licensor purported to revoke a license to produce plays in licensor’s theatre.
   o Lord Greene MR (CoA): the license shouldn’t be regarded as an entity separate from the contract but as a contractual right subject to normal contractual rules. On the facts, the license was intended to be irrevocable and thus there was an undertaking not to revoke that the Court will give effect to. It didn’t matter that it had been purportedly revoked by the time the case came to court
   o HL found that on the facts the license was intended to be revocable, but the analysis remains authoritative

• Next case: Hounslow LBC v Twickenham Garden Developments – C landowner contracted with D to do building work. C was dissatisfied with D’s progress and sought to terminate the contract and applied for an order that D leave.
  o Megarry J: the claim failed. C would succeed if D had broken the contract (but this was disputed and still unresolved), but Equity would not help a landowner to break a contract (though accepting the alternate analysis that specific performance may well be available to assist D)
  o This is a different analysis of why Equity recognizes a license: it declines to assist the licensor
• Verrall v Great Yarmouth BC: The National Front had contracted to hold their conference in D’s premises, and when Labour took control of the council, the license was purportedly revoked (without having been entered into possession so only possible equitable remedy was specific performance).
  o CoA held that specific performance should be ordered as damages are inadequate because the National Front had been unable to find another venue.

Question 7

I(b): Are all contractual licenses irrevocable?

1. Thompson v Park

• Goddard LJ?
• Megarry J in twickenham?

2. approach taken in AUS and NZ?
   - Cowell v Rosehill Racecourse
   - Mayfield Holdings v Moana Reef
3. is this restrictive approach justified?

Answer 7

• There are some contrasting 20C decisions:
  1. Thompson v Park: two headmasters agreed to share the school of one of them (licensor), the license purported terminating when disagreements arose.

o CoA held that the license had been revoked (lawfully or not) and licensee had no right to return.
o Justifications:
♣ Goddard LJ: Licensors can revoke licenses in breach of contract subject to having to pay contractual damages (this was decided after Winter Gardens and considered to be inconsistent with it and bad law – Verrall)
♣ The court cannot specifically enforce an agreement for two people to live peaceably under the same roof (more defensible)
♣ Megarry J observed in Twickenham Garden that this court was undoubtedly influenced by the high-handed conduct of D (a ‘riot’) – as he couldn’t improve his position by forcible entry, he should be treated as if not in possession

2. AUS and NZ took different approach:
   o Cowell v Rosehill Racecourse (High Court of AUS): accepted the general contractual analysis of English courts but Australian courts are far less willing to give equitable remedies – they will not assist licensees in entertainment contracts (eg. horse-racing) or building contracts
   o Mayfield Holdings v Moana Reef (NZ) – adopted similar approach to a building contract

• This restrictive approach is well-justified:
  o Specific performance is discretionary and courts should be cautious in giving it outside contracts for conventional proprietary interests – is it really right to force someone to continue to employ a builder that he doesn’t like? The Australian approach gives the licensor greater control over his own land – it reflects society’s expectations better than English cases

Question 8

II. Licensees and Purchasers

• Early decisions deny binding effect:

(i) King
(ii) Clore

• Mid 20C developments:

(i) Errington
(ii) Bendall
(iii) Ainsworth
(iv) Binions
(v) DHN Food

• rejection of Denning’s developments?

Asburn
s. 4(1) LPA
could s.116 be used to attack Ashburn?

Answer 8

• If licenses are to bind purchasers, it must be by equitable interest and not contract (no privity)
• Early decisions deny binding effect:

o King v David Allen: HL held that a license to place an advert on a building didn’t bind a lessee from the licensor
o Clore v Theatrical Properties: CoA held that a license to use the front part of a theatre didn’t bind licensor’s assignee

• Mid 20C developments:
  o Errington v Errington: a successor in title is bound. Licensor bought a house for son and daughter-in-law that they would own it provided they paid the mortgage (2/3 purchase price). He died and widow (successor) sought possession when son left his wife. Was either decided because 1) there was an estate contract for future entitlement or 2) the payment gave rise to estoppel (though estoppel didn’t develop until after this case was decided)
  ♣ Denning: licenses can no longer (since cases like Winter Gardens) be revoked in breach of contract – a purchaser for value without notice is the only person who can escape this [Denning merely stated a principle without authority or explanation]
  o Bendall v McWhirter: Denning said that the equitable remedy available against the licensor binds the purchaser (like in restrictive covenant)

o National Provincial Bank v Ainsworth: HL rejected Denning’s analysis, denying the deserted wife’s equity. Lord Upjohn and Lord Wilberforce said that equitable remedies do not bind purchasers unless there is a proprietary interest

o Since Ainsworth most developments centred on estoppel but Denning decided Binions v Evans on the basis that a contractual license is a proprietary interest and Goff LJ applied it in DHN Food v Tower Hamlets

• Courts reviewed authorities in Ashburn Anstalt v Arnold (licensee sold his shop to a developer subject to a license to retain the shop rent free until redevelopment took place)
  o Fox LJ (CoA): contractual licenses cannot affect successors in title. Errington was the only contrary authority and it had not been supported by any authority so was unconvincing
  o Can be said that Fox LJ’s dicta was obiter (because the license in that case was held to be a lease) but he did give very full consideration to the license question – so for the time being licenses must be seen not to bind successors in title
• S4(1) LPA 1925 supports Ashburn Anstalt: ‘an equitable interest in land shall only be capable of being validly created in any case in which an equivalent equitable interest in property … could have been validly created’ before the Act (courts can’t develop new proprietary interests)
• S116 LRA 2002 is a possible way of attacking Ashburn Anstalt: ‘for the avoidance of doubt’ a ‘mere equity’ is capable of binding purchasers (supports argument that a contractual license is a mere equity binding purchasers – would restore the equitable remedy analysis rejected in Ainsworth. BUT a wide interpretation of s116 will unlikely be adopted because ‘avoidance of doubt’ means (per Law Comm) a restatement of the present law)

Question 9

iv. Constructive Trusts
1. explanation
2. based on Binions v Evans
3. when does it arise?
4. is it possible to circumvent Asburn + numerus clausus by creating a trust?
5. does the CT bind subsequent purchasers? see Chattey

Answer 9

• Any form of license can be protected by a constructive trust (but most influential in contractual licenses)
• Based on Binions v Evans: purchaser agreed to buy land subject to licensee’s rights and paid a reduced purchase price accordingly. Denning imposed a CT, approved by CoA in Ashburn Anstalt. CTs get around King and Clore – unnecessary to ask whether an existing interest binds purchasers (a fresh trust arises at time of sale by virtue of purchaser’s promise)
• When? Purchaser must promise to give effect to the license (NOTE: in DHN Food v Tower Hamlets Denning said that a CT could be imposed on the licensor, and this was supported by Lord Browne-Wilkinson in Re Sharpe. But this would be to give all contractual licenses the status of interests in land by the back door and was condemned in Ashburn Anstalt)
• So… Is it possible to circumvent Ashburn Anstalt and numerus clausus simply by creating a trust (eg. creating an easement without dominant land by declaring an express trust)? Trusts bind purchasers whether or not the interest is proprietary… But two questions:
  o Can there be a trust of a non-proprietary beneficial interest? Purpose trust cases and Binions suggest YES
  o Does that constructive trust bind purchasers? Problems arise in the context of licenses. A is licensor and licenses to B. C buys A’s land and promises to be bound by the license. Binions applies. D then buys the land from C, without promising anything. Will the constructive trust bind him? Why should it matter just because he bought the land from C and not directly from A (where Ashburn Anstalt applies and D will not be bound)?
• Thus ‘instinct’ goes against these CTs binding purchasers, but Binions itself can be justified because of the purchaser’s promise. Chattey v Farndale Holdings said that the CT didn’t bind subsequent purchasers because they didn’t promise to respect the interest protected under it. But this is not conclusive, because in that case the purchaser couldn’t be affected by the trust even if it were binding, because it wasn’t registered. The issue remains open.

Question 10

v. Estoppel Licenses

Answer 10

• Normal case: C is exercising rights over land in the belief that there is a right to do so, acts to his detriment and owner is aware of the circumstances.
• Moriarty argued that the court is doing little more than avoiding formality rules in recognizing conventional property rights, but this is wrong because:
  o Estoppel can give effect to a license that has nothing to do with a property right (eg. not involving exclusive possession – King and Clore)
  o Court may give a license as a remedy, and contractual cases (eg. Errington) can sometimes be argued on an estoppel basis

Question 11

v. Estoppel Licenses

- Why should purchasers be bound?

Answer 11

o Estoppel is weaker than contract in establishing causes of action generally (can only be used as a sword in proprietary estoppel) but why is it stronger in binding purchasers than contracts?
♣ Atiyah: Law places greater emphasis on actual detriment than merely promises (estoppel requires actual detriment; contract merely requires consideration – and a promise to act suffices)
♣ The earlier cases involved claims to recognized interests in land: eg. Dillwyn v Llewelyn was a claim to a fee simple (obviously binding on sucessors in title). The extension from proprietary interest to licenses is not stressed in the cases – emphasis is placed on the fact that there is an estoppel (so the development can be regarded as accidental)
♣ Could just be the state of the authorities: King and Clore deny proprietary effect to contractual licenses but nobody’s denied it to estoppel licenses (even without good reason for the difference)
♣ Maudsley: contractual licensee has remedy against licensor even after purchase, but estoppel licensee doesn’t, justifying a remedy against purchaser. But it was convincingly argued that by more recent developments in estoppel there is a remedy against licensor.
♣ If the court were to allow specific performance of contractual licenses to bind purchasers, it would allow licensors to decide the scope of proprietary interests (contravening numerus clausus). By contrast, an estoppel doesn’t give effect to expectations as a matter of right, so courts can keep more control over developments.
♣ BUT purchasers might find estoppel licenses as difficult to discover as contractual licenses (probably more difficult, as contractual licenses are likely to be in writing)

Question 12

v. Estoppel Licenses
- How far contractual licenses and estoppel licenses can apply to the same facts (if there is a contract, can there still be an estoppel?)

• which case suggests the overlap?
• what is different about ER Ives?
• what if detriment is the same as the consideration?
  (NB Carrick and Ives on one hand vs Errington on the other)
• nature of the remedy in estoppel
• why is it surprising that estoppel not used in Ashburn v Anstalt?
• Effect of court’s failure to consider Estoppel in Asburn

Answer 12

o Overlap is suggested in Ashburn Anstalt because it said that Errington could be looked at as an estoppel case – but Lloyds Bank v Carrick said that estoppel couldn’t rescue an estate contract that wasn’t registered (you can’t claim what you already through an estoppel). On the other hand ER Ives v High recognized an estoppel where an equitable easement failed for non-registration (perhaps distinguishable because the easement in Ives failed before the estoppel arose)
o Probably harder to argue estoppel if the detriment is the same as the consideration (both Carrick and Ives had separate detriment) – but if Errington can be argued as estoppel, then it would mean that consideration (mortgage payment) can be detriment. If this is correct then many contractual licenses will be enforceable by estoppel, but only if the consideration is carried out!
o Estoppel remedy is discretionary – if the detriment is rent then a long term remedy probably won’t be given. It is surprising that on the facts of Ashburn Anstalt (detriment = parting with one’s land in the faith that he would have a license) estoppel wasn’t used though it was explicitly considered when dealing with Errington
o The failure of Ashburn Anstalt to address the analysis raises doubt as to the extent of the overlap between contract and estoppel

Question 13

v. Other analyses (of how a purchaser might be bound)

4 listed:

Answer 13

• Constructive trust (license can bind a purchaser without reference to a proprietary interest)
• Benefit and burden doctrine (ER Ives v High)
• Economic torts – it is a tort to induce a person to break a contract. There is some scope to argue that the purchaser has induced a breach of contract – mere constructive notice wouldn’t lead to liability, but those who know about the license will be at risk. The tort hasn’t been fully discussed in the license context (but Megaw LJ referred to it in Binions v Evans), but Ashburn Anstalt involved a purchaser knowing about the license and it’s unlikely that the court would have found otherwise if they had invoked economic tort
  o If the tort does apply then a major problem would be defence of justification – which might have a greater role in property contexts than the tort generally
• Parties may agree on a restriction to the licensor’s registered title that limits the power of sale (Donington Park v Wheatcroft); it doesn’t create a proprietary interest but it may mean that purchasers have to agree to respect the license

Question 14

Licenses II: Creation and Transfer

• formality requirements for contractual licences
• assignable?
• formalities for assignment?
• formalities for estoppel licences?

Answer 14

• No formality requirements for contractual licenses (as they are not proprietary)
• Licenses are said to be personal to the licensee and therefore unassignable, but in commercial settings benefits of contractual licenses have shown to be able to be assigned (Clore v Theatrical Properties), but not their burdens. Thus there is no universal restriction on the right to assign but the nature of each license must be looked at
• Assignment doesn’t require formalities, but estoppel licenses being proprietary and equitable, need to be in writing (s53(1)(a),(c) LPA 1925)

Question 15

Licenses III: Relationship constituted by the license

trespass & nuisance

Answer 15

• Trespass and nuisance:

o Licensees cannot rely on either – they are inapplicable because licenses are non-proprietary
o Trespass:
♣ Contractual remedies available against licensor, so trespass is unnecessary; however, against third parties it becomes important.
♣ A license that doesn’t confer possession cannot be the basis of trespass (Hill v Tupper)
♣ But Lord Upjohn in Ainsworth said that the deserted wife could sue in trespass – so a licensee in possession (or maybe exclusive possession necessary?) can sue in trespass
♣ What of a licensee who has never been in possession? Manchester Airport v Dutton did give a remedy in trespass, but it has been criticized and has been held only to apply to occupational licenses – it won’t apply to a license merely allowing access

o Nuisance
♣ No. No. No. Lots of authority.
♣ BUT Hunter v Canary Wharf Lord Hope and Goff accepted that licensees in exclusive possession can sue in nuisance, and none of the contrary authority involved licensees in exclusive possession. Thus the position is unsure.

Question 16

Winter Garden v Millenium (1946 CA; 1948 HL)

CoA

Answer 16

A license does NOT have an existence independent of the contract that created it, because a license created by a contract is not an interest – it is a contractual right to do certain things which otherwise would be trespass, and so its nature, particularly its revocability, cannot be segregated from the contract itself and must be construed by considering the contract as a whole. (Lord Greene MR)
Facts: Licensor granted a contractual license of their theatre with no provisions in the contract allowing for revocation. D purported to revoke, arguing that the license was distinct from the contract and under rule of law determinable at will.
Held:
1) The revocability of a license cannot be segregated from the rest of the contract in that the nature of the license depends on the terms of the contract, which must be construed according to ordinary principles
2) Upon the true construction of the terms, the licensors had no power to revoke the license
The grant of an irrevocable license implied a negative undertaking by the licensors not to revoke. An injunction can therefore be granted to restrain the licensors from acting upon the purported revocation

Question 17

Winter Garden v Millenium (1946 CA; 1948 HL)
CoA

Lord Greene MR:

• re lack of licensee’s protection (what might be used today?)
• what did the parties expressly agree/what did they not?
• ordinary remedy for breach of contract?
• remedy in this case?
• why did Hurst v Picture Theatre not apply?

Answer 17

o A licensee may spend lots of money redecorating the theatre after which the licensor could immediately revoke the license and the licensee would have no means of recovering the expense. Thus the lack of protection of the licensee would be unreasonable [NOTE: today perhaps the estoppel argument could be raised?]
o The parties expressly gave power to determine, within the agreement, to the licensee but not the licensor – we can’t imply a provision granting the licensor a right to immediate revocation (rejecting R’s argument that such a provision is implied by law
- So the purported revocation was a breach of contract, but the normal remedy was to sue for damages. For an injunction there must be on the construction of the contract a negative clause express or implied – in the present case the granting of an irrevocable option was enough to imply such an undertaking not to revoke.
- But what if the purported revocation has already taken place? Equity will grant an injunction to stop R from acting upon the purported revocation
- Hurst v Picture Theatres doesn’t apply because that case concerned a license coupled with an interest while this is a pure contractual license (nobody tried to argue otherwise)

Question 18

Winter Garden v Millenium (1946 CA; 1948 HL)
CoA
HL

1. Viscount Simon agreeing with the COA
2. Lord Porter disagreeing?

3.

Answer 18

Viscount Simon agreed with CoA that a license cannot be revoked in breach of contract, dismissing Wood v Leadbitter as not addressing the point of law in question and in any event out of date for being pre-Judicature Act.

Lord Porter disagreeing, observing that the entire case assumes that a license is prima facie revocable and the present case is indistinguishable as both had been given for a specific purpose for consideration. The weight of the authority holds against the Majority’s contention that a license once given in general terms can never be terminated.

However, the only alternative to a perpetual license was not immediate termination – it can be the intention of the contracting parties that the licensee be given a reasonable amount of time upon notice of withdrawal of permission to leave. Therefore this was implied into the contract, not irrevocability as was decided in CoA.
(Viscount Simon) Lord Uthwatt, deciding the question on construction, did not express a firm conclusion on the correctness of Hurst v Picture Theatres, but observed that Equity’s role in granting an injunction is to do what they can to preserve the sanctity of a bargain. If a licensee who received no notice can get an injunction for unauthorized interference by licensor, then he sees no principled difference between that and unauthorized revocation – an injunction should be available in both.

Viscount Simon

• Approved Hurst v Picture Theatures: if I pay for a ticket to witness an event and I behave well, then you don’t have the right to turn me out early and if you do I must have more than just return of the price of the ticket
• Thus Wood v Leadbitter (a similar case, also the revocation of a ticket) can only be understood because at that time the system of pleading was far stricter, and the only point that was decided was that when C was forcibly removed from the venue he still had the leave of the licensor, and he didn’t. The question wasn’t whether the contract preserved C from being treated as a trespasser until the races were over, because at the time joinder of different causes of action in the same suit was not permitted (and in that case therefore C sued in tort)
  o Maybe since the Judicature Act Equity would have been able to remedy the injustice in that case, but there’s no point dwelling over a decision over 100 years ago
• BUT on a proper construction of the contract that license wasn’t intended to be perpetual but that the licensor was to inform the licensee of a withdrawal of permission and the licensee would have a reasonable amount of time to withdraw – the only alternative to perpetual license is not an instant termination

Question 19

Hounslow v Twickenham (1971)

Routes to irrevocability

License coupled with an interest

Answer 19

Megarry J: No authoritative definition of what suffices as an interest for the purpose of a Hurst v Picture Theatres license coupled with an interest has ever been given, but while Hurst assumes that a right to see a performance sufficed, and Vaughan v Hampson extended this and held that since D gave C leave and license to be present in his house (a gratuitous invitation to attend a creditor’s meeting) C ‘had a right, coupled with an interest, entitling him to be’ there and D could not eject him (Cleasby B, Pollock B agreeing). But this decision was mostly ignored: Hurst didn’t cite it, and Winter Garden didn’t try to argue on this ground, assuming that only an interest in land sufficed. In the present case, if the right to watch a movie or attend a meeting sufficed as an interest, then there’s no reason why the right to do work on the land failed.

Question 20

Hounslow v Twickenham (1971)

Routes to irrevocability

Irrevocable contractual license:

Answer 20

i. Law
Megarry J: This is the method in Winter Garden that a contractual license granted for a purpose for a specified time includes a contract not to revoke the license until that time terminates. Nothing in HL’s speeches suggests that CoA was wrong in law – indeed Lord Simon’s speech is consistent with Lord Greene MR’s view that a license has no separate entity from the contract. Thus the question is whether D in this case had a contractual license that either expressly or by implication is subject to a negative obligation by C not to revoke it. If so,Equity will intervene.

ii. Fact Megarry J: The contract was for the execution of specified works during a specified period that was still running, which confers on each party specified rights on specified events to determine the contractor’s employment under the contract. Thus, there is an implied negative obligation on C not to revoke the license while the period is still running (Hurst followed). This is a fortiori in the instant case because the building contractor’s work involved much more effort (bringing equipment, sub-contracting, hiring…) than someone going into a cinema to watch a film.

Question 21

Hounslow v Twickenham (1971)

Routes to irrevocability

Equity will not assist in breaking a contract

Answer 21

Megarry J: C is effectively asking the court to grant an injunction to expel D who has a contractual right to remain – this is asking the court to assist it in breaking its contract. The court will not do this.

Question 22

Hounslow v Twickenham (1971)

Routes to irrevocability

Specifically enforceable contract

Answer 22

Megarry J: An injunction will not be granted if the other party was entitled to specific performance of the contract. Though this point is unnecessary in the present case, he sees no reason why it wouldn’t be specifically enforceable. If the work is sufficiently defined then damages are inadequate. [However he leaves the matter open]

Question 23

Hounslow v Twickenham (1971)

Routes to irrevocability

Entitlement to unilateral performance in lieu of accepting breach

Answer 23

Megarry J: Relying on White and Carter v McGregor, the contractor may have a right to unilaterally perform his side of the contract and demand the other perform theirs, in lieu of accepting damages. But the dissenting speeches that reject the doctrine aside, the doctrine is subject to two limitations: 1) the contract must be capable of performance without cooperation (in ‘doing, allowing or accepting something’) by the other party and 2) if the party has no interest in performing over claiming damages, then he ought not be entitled to do it. The first principle will PROBABLY be fatal since the contractor’s performance relied on the ‘cooperation’ of the landowner not to withdraw permission (or not, since the contractor already had possession of the licensor’s land so didn’t require any ‘act’), but in any case the court should be slow to apply the doctrine to a category of case not fairly within the contemplation of their Lordships in that case.

Question 24

Hounslow v Twickenham (1971)

Routes to irrevocability

‘License acted upon’

Answer 24

Megarry J: [Strictly obiter] Feltham v Cartwright held that a license ‘having been acted on, was not recoverable’ (acted on meaning suffering detriment)

Question 25

Hounslow v Twickenham (1971)

Routes to get an eviction
A landowner may be entitled to an injunction to exclude a licensee holding an unrevoked license

• which case is cited as authoirty?
• how does Megarry explain D’s behaviour?
• how can that case be explained?

Answer 25

Megarry J: This was decided in Thompson v Park, where C successfully obtained an injunction for trespass against D, whom he had granted a contractual license unlawfully revoked.

That case relied on a case that had previously been held not to be good law, and it can be suspected that it was decided to condemn D’s ‘high-handed and riotous behaviour’.

[Note: Megarry J said that the case essentially decided that ‘a landowner was entitled to an injunction to exclude a licensee even though the license was unrevoked’, but surely this isn’t what the court decided: the court decided that even though the licensor had no right to revoke the license, he nevertheless had a power to do so under common law and exercised it.]

At any rate, that case can be decided on the ground that if anyone forcibly and riotously breaks into a building in the occupation of the landowner, then the court will grant an injunction to expel the intruder even if he acted on a claim to a subsisting license. Furthermore, that was a license to shared and not exclusive occupation, and a court couldn’t reasonably specifically enforce such an agreement.

Question 26

Hounslow v Twickenham (1971)

Miscellaneous Points

Interest’ for the purpose of license coupled with an interest means interest in property

Answer 26

Megarry J: It means nothing more than that, though it can be in land or in chattels, legal or equitable. There is no need to expand the word artificially, now that contractual licenses can be made irrevocable in their own right.

Question 27

Hounslow v Twickenham (1971)

Facts/held

Answer 27

Facts: C landowner contracted with D to do building work. C was dissatisfied with D’s progress and sought to terminate the contract and applied for an order that D leave.
Held:
1) A license to enter land is a contractual license if it is conferred by a contract: it doesn’t matter whether the right is primary or ancillary (in this case the primary purpose was building work and entering land was only ancillary)
2) A contractual license is not distinct from the contract but merely one of its provisions
3) The willingness to grant equitable remedies to enforce a contractual license depends on specific enforceability (if it is, then Equity will not grant an injunction)
4) Even if it’s not specifically enforceable, the court will not grant equitable remedies in order to procure or aid a breach of the license
5) Accordingly C’s claim failed and D was entitled to stay.

Question 28

King v David Allen (1916)

• Facts
• Lord Buckmaster
• Lord Loreburn

Answer 28

Facts: Licensor gave licensee the right to place adverts on the walls of a house proposed to be constructed in the future, and subsequently leased the property to a different company (and thus relinquished his control over the land enough that he couldn’t enforce the advertisement contract) that refused to hold good on the advertising promise.  
Lord Buckmaster (Lord Loreburn agreeing): a contract between two parties creates nothing but a personal obligation; thus, one party can get damages from the other, but the company was not bound since the license created no rights in land. 
Lord Loreburn: Nothing in this judgment impacts on the licensee’s right to claim damages.

Question 29

Errington v Errington (1952)

• effect of equity on a contractual licence
• Denning on who could be bound (who did Denning say would not be bound?)
• Fox LJ in Ashburn Anstalt
• how did Fox explain the decision?
• why was Denning’s broad statement unnecessary?
• Would Winter Garden help? (why?)
• facts
• held

Answer 29

Ways of achieving binding effect

Equity makes a contractual license binding on everyone except a purchaser without notice

Per Lord Denning (Somervell LJ agreeing): Because of Equity a contractual license cannot be revoked by breach of contract – neither the licensor nor his successors in title can ignore the contract except a purchaser for value without notice. [Didn’t say why…]

Fox LJ in Ashburn Anstalt v Arnold DISAPPROVED: a mere contractual license id NOT an interest in land binding on a purchaser with notice – this would be irreconcilable with King v David Allen. The actual decision must be correct, but must be explained on alternate grounds like:

1) There was a contract to convey the house on completion of payments giving rise to an estate contract binding on the successor in title
2) Estoppel license
3) Payment of instalments gave rise to direct proprietary interests by constructive trust (though until 1970 (Gissing v Gissing) the constructive trust hadn’t been much considered)

The existence of alternate grounds makes such a broad statement unnecessary, and it is in any case not supported by authority.

Winter Gardens doesn’t help either, because that was purely contractual and is not authority for binding third parties. Although Errington doesn’t exactly conflict with later HL cases (Ainsworth explicitly left the question open) it is inconsistent with earlier ones, and these earlier ones must be preferred because of the reasoning in Ainsworth: before Errington, the law was well-settled, resting on an important distinction between contractual obligations that give rise to no interest in land, and proprietary rights which do.

Facts: Licensor bought a house for son and daughter-in-law promising that they would own it provided they paid the mortgage (2/3 purchase price). He died and widow (successor) sought possession when son left his wife.

Held:

1) Licensees were entitled under a personal contract to occupy the house for as long as they paid the instalments.
2) On whether they were entitled to conveyance of the property when the instalments had been fully paid:
a. Somervell LJ: Questionable under s53 and 55 LPA 1925 as the contract was oral – the doctrine of part performance would probably apply
b. Denning LJ: The equitable right to remain so loan as they paid the instalments will grow into a good equitable title to the house as soon as the mortgage was paid
c. Hodson LJ expressed no opinion, as the issue didn’t arise on the facts

Question 30

Errington v Errington (1952)

Denning (Somervell agreeing)

• did the licensees bind themselves?
• were they tenants at will?
• infusion of equity…

Answer 30

• The licensees didn’t bind themselves to pay the instalments (court will only imply a term if it is necessary, and here it isn’t)
• They weren’t tenants at will paying no rent because the father couldn’t eject them as long as they paid the instalments, and yet tenancy at will implies either party can terminate without notice
• “the infusion of equity means that contractual licenses now have a force and validity of their own and cannot be revoked in breach of the contract. Neither the licensor nor anyone who claims through him can disregard the contract except a purchaser for value without notice.”

Question 31

Binions v Evans (1972)

• what does a contractual licence for life give?
• why would CT arise? (which cases are distinguished by Denning?)
• Fox LJ in Ashburn
• Lloyd LJ in Chaudhary v Yavuz
• economic tort of interference with existing contractual rights
• facts
• held

Answer 31

Routes to Binding Effect on Third Parties

Contractual license to occupy for life gives an equitable interest in land

Denning: Much authority supports this proposition, and by virtue of this the license will bind purchasers.

Constructive trust

Denning: Even if there was no equitable interest to begin with, the buyer stipulating that they would take the house subject to D’s rights under the agreement, paying less as a result, is bound by a constructive trust for D’s benefit because it would be inequitable for C to turn D out contrary to the stipulation. In neither King nor Clore did the purchasers take subject to the rights of the licensees – if they had, he doubts that the court would have allowed them to disregard the right.

Fox LJ in Ashburn Anstalt LIMITED this principle: the test for the imposition of a constructive trust is whether the owner conducted himself in a way that it would be inequitable to allow him to deny C an interest in the property (Gissing v Gissing). Though on the facts Denning had been right to impose a constructive trust, one will NOT BE IMPOSED UNLESS THE CONSCIENCE OF THE PURCHASER IS AFFECTED. The fact that land is conveyed subject to a contract doesn’t imply that there is an obligation to give effect to the provisions of the contract. In Binions, the lowering of price made the constructive trust analysis suitable.

Lloyd LJ in Chaudhary v Yavuz further QUALIFIED the principle: A constructive trust will NOT arise where the contract whereby the purchaser acquired the property only identifies the third party right through general words (eg. those of a Standard Condition or some class of right). In such cases the reference is because the vendor has an obligation to disclose rights. For a constructive trust to arise, there must be express reference to the right of the licensee.

Economic tort of interference with existing contractual rights

Megaw LJ mentions it but doesn’t go any further. He does say though that the licensor didn’t free himself from the contract with the licensee simply by selling the land [even though the sale was subject to the stipulation that the licensee’s right will be respected]

Facts:

purchaser agreed to buy land subject to licensee’s contractual right to reside there as long as she desired and paid a reduced purchase price accordingly.

Held:

1) Denning: The agreement gave rise to a contractual license resulting in an equitable interest that the court will protect [Megaw and Stephenson LJJ decided the case on the ground that D was a tenant for life within the meaning of Settled Land Act 1925]
2) When the cottage was sold a constructive trust arose to permit D to reside there during her life or as long as she desired

Question 32

Ashburn Anstalt v Arnold (1988)

Rejected routes to binding effect on third parties
A contractual license without more creating an interest binding on purchasers with notice

Answer 32

Fox LJ disapproved Errington: a mere contractual license id NOT an interest in land binding on a purchaser with notice – this would be irreconcilable with King v David Allen. The actual decision must be correct, but must be explained on alternate grounds like:

1) There was a contract to convey the house on completion of payments giving rise to an estate contract binding on the successor in title
2) Estoppel license
3) Payment of instalments gave rise to direct proprietary interests by constructive trust (though until 1970 (Gissing v Gissing) the constructive trust hadn’t been much considered)

The existence of alternate grounds makes such a broad statement unnecessary, and it is in any case not supported by authority. Winter Gardens doesn’t help either, because that was purely contractual and is not authority for binding third parties. Although Errington doesn’t exactly conflict with later HL cases (Ainsworth explicitly left the question open) it is inconsistent with earlier ones, and these earlier ones must be preferred because of the reasoning in Ainsworth: before Errington, the law was well-settled, resting on an important distinction between contractual obligations that give rise to no interest in land, and proprietary rights which do.

Question 33

Ashburn Anstalt v Arnold (1988)

A conveyance subject to the contract without more will NOT give rise to a constructive trust (conscience must be affected)

• how did Fox restrict the test for imposing a CT?
• Was Denning right to impose a CT?/but where did Fox differ in his reasoning to Denning?
• when would a CT not arise?
• why was a CT in Binions justified?

Answer 33

• Fox LJ limited the principle in Errington: the test for the imposition of a constructive trust is whether the owner conducted himself in a way that it would be inequitable to allow him to deny C an interest in the property (Gissing v Gissing).
• Though on the facts Denning had been right to impose a constructive trust, one will NOT BE IMPOSED UNLESS THE CONSCIENCE OF THE PURCHASER IS AFFECTED.
• The fact that land is conveyed subject to a contract doesn’t imply that there is an obligation to give effect to the provisions of the contract.
• In Binions, the lowering of price made the constructive trust analysis suitable.

Question 34

Chaudhary v Yavuz (2012)

• how did it affect scope of CT?
• when would a CT not arise?
• what is approach of Australia, Canada and US re quasi-public spaces?
• do they recognise equitable remedies?

Answer 34

Further qualifying the constructive trust principle

Lloyd LJ: A constructive trust will NOT arise where the contract whereby the purchaser acquired the property only identifies the third party right through general words (eg. those of a Standard Condition or some class of right). In such cases the reference is because the vendor has an obligation to disclose rights.

NOTE: In quasi-public space, Australian, Canada and the US have switched to a doctrine of ‘reasonable access’ rather than ‘arbitrary exclusion’, curbing the absolute right of landowners in favour of the protection of human rights (freedom of movement and rights of assembly). But in private space, these jurisdictions are slower to recognize Equitable remedies, in an attempt to uphold insofar as possible the absolute rights of landowners…

Question 35

Swadling, ‘Opening the numerus clausus’

Background on Dutton

Answer 35

CA majority (Chadwick LJ dissenting) upheld order for possession, despite Manchester Airport having only a licence

Laws LJ if D had been in occupation of the land before the protestors there would have been no doubt that it was entitled for possession

• followed from Lord Upjohn in Natural Provincial bank where wife occupied house under a licence but would bring proceedings of trespass against trespassers

Laws challenged what the difference is?? Laws said ‘licencee not in occupation may claim possession against a trespasser if that is necessary to vindicate and give effect to such rights of occupation as by contract with his licensor he enjoys’

• same principle as licensee in possession ejecting trespasser

Question 36

Swadling, ‘Opening the numerus clausus’

His argument against Dutton

Answer 36

a licensee in possession can bring a claim against trespass because he has a right to possession which is independent of the licence under which he occupies the land

i.e. wife in Ainsworth had possession whereas Airport did not!

He notes with adverse possession, they strangers to property acquire a right good against the world except someone with prior right - the fact of possession alone gives right to sue, the licence is a background fact

Laws LJ made an error: contractual licensee acquires 2 sources of right:

(i) contract - doctrine of privity prevents bringing a claim against C
(ii) fact of possession - can bring claim against C

Says Laws LJ supports ‘discretionary remedialism’ (term from Birks)

by manipulation of remedies, closed number of property rights inappropriately increased

Question 37

McFarlane ‘identifying property rights: a reply to Mr Watt’

Background to W’s argument:

(i) specific performance point

and McFarlane’s reply

Answer 37

2 distinct arguments:

(i) specific performance point:

specific performance is relevant to proprietary status of a right in 2 ways:

(a) ‘doctrine of anticipation’
i. e. Walsh v Lonsdale

but this is irrelevant in determining proprietary status of right because it depends on A being under a binding obligation to confer on B a right which is independently recognised as proprietary

SWADLING notes that the doctrine only operates to give C a property right in equity in circumstances where the evidential performance of the contract would result in property rights at law

ONLY concerned with HOW the right can be acquired - extends the list by which the right can be acquired and not the list of rights which have proprietary status

(b) whether or not it confers on B recognise property right, if it obliges A to permit B to use A’s property then can bind C (see Verrall v Great Yarmouth BC)

Judicial support from Denning in Errington v Errinton and Browne-Wilkinson in British Airport v Powdrill

but this misunderstands effect of SP on nature of right - it treats what is necessary as sufficient! Decision of SP depends on which remedy is most appropriate

Whether to confer proprietary status on right involves consideration additional to those addressed when deciding whether specific performance is available against A:

(1) why should B’s right be protected against party who has not made a contractual promise to B and
(2) B must show why needs sufficiently strong such that he can overcome disadvantages inherent in allowing the contract between A and B to impose burden on the property and hence restrict ease of transfer

Question 38

Lord Browne-Wilkinson makes clear availability of specific performance not sufficient to render a right proprietary

Answer 38

what matters is the nature of the right, not the remedy which exists for its enforcement

Question 39

McFarlane ‘identifying property rights: a reply to Mr Watt’

Background to W’s argument:

(ii) 3rd party point

and McFarlane’s reply

Answer 39

W points to cases in which B’s enjoyment of property, initially based on contract with A, can be protected from interference by C so can bind C

‘NON-SEQUITUR’ - ignores possibility that C may be bound NOT by B’s contract with A but by new right which arises directly against C as a result of C’s conduct

i.e. Ashburn Anstalt: CT aises to protect a licensee of land from 3rd party- gives effect to a new right

Subsequent cases to AA recognise that it may be used to protect rights other than licences (

Lyus v Prowsa shows C’s conduct may be sufficient to generate a new right in B even if B had no right at all against B before sale to C

Even AA shows right arises independent of any right B may have had against A: ‘CT will arise only where C can be found to have undertaken a new obligation, not otherwise existing’ (Lloyd v Dugdale)

therefore, the CT is a mechanism for acknowledging that C’s conduct in undertaking to confer a new right on B justifies the recognition of such a new right

Question 40

McFarlane ‘identifying property rights: a reply to Mr Watt’

Why is the CT ‘clumsy’?

Answer 40

(1) difficult to identify the property which is being held on trust;
(2) carries unwelcome implications that B’s new right is proprietary

but benefits is that it does not need to be registered s. 53(1) and can be protected against C without having to show dealings with A created a property right

Question 41

McFarlane ‘identifying property rights: a reply to Mr Watt’

The future: a path to proprietary status

3 ways to achieve this

Answer 41

He reiterates the article is not intended to show that the law shouldn’t develop in that way

He stresses that there is a need to show that conditions on which new rights may arise against C are not relaxed to such an extent that they subvert policy reasons behind limiting the list of property rights i.e. need to promote the ease of transfer of property

1. defining precisely when direct right arises
2. whatever grounds on which new rights arise, may be necessary to limit these general tests where C is the recipient of property - principles and ease of conveyancing may be important considerations
3. Interesting consequences of conferring proprietary status on restrictive covenants was that Tulk v Moxhay was reinterpreted not as conferring general right - but fact specific - 3rd parties may prefer to accept possibility of being subject to novel kinds of properly defined right where it is limited.

Question 42

McFarlane ‘identifying property rights: a reply to Mr Watt’

Conclusion

Answer 42

Recognising property right must be based on decision that right is by its nature sufficiently important to warrant protection even if properly to which it relates changes hands

Issues:

burdens will be placed on C’s property

• must restrict proprietary status to those rights which confer ‘compensating benefits on another piece of property’ - see easement and covenants requirement for accommodation

McFarlane concludes that licensees lack such compensatory benefit so should not be recognised as proprietary

Question 43

Dewar ‘licences and land law: an alternative view’ (1996)

Answer 43

Criticises overemphasis on conceptual formalism - whereby judges do or ought to decide cases according to limited range of conceptual categories - characterised by refusal to regard anything other than conceptual arguments (sometimes policy) as reasons or justification for decisions

• this emphasis on conceptual tidiness obfuscates complexity of non-conceptual debate
  i. e. conceptual formalism fails to: (1) highlight controversial aspect of judicial development of licence as a mechanism of dispute settlement; (2)offers an evaluation of licence that is false in many cases

Question 44

Dewar ‘licences and land law: an alternative view’ (1996)

Is there any normative use of conceptual formalism?

Answer 44

need for certainty in land transactions (i.e. Browne-Wilkinson in Sharpe) who argued that rationalisation of law was necessary in order to do justice to the many thousands of people who never come to court at all but who wish to know with certainty what their proprietary rights are…..

Question 45

Dewar ‘licences and land law: an alternative view’ (1996)

Is there any normative use of conceptual formalism?

Dewar’s response

Answer 45

• uncertainty arose in family context - has not spilled over into ‘commercial transactions’ which remains settled
• it is precisely because family members do not hammer out their positions in advance that the remedial nature of the law arise
• law of estoppel and licence no more than uncertain than law of property of divorce

Question 46

Dewar ‘licences and land law: an alternative view’ (1996)

criticism of overemphasis of formalism re third parties

Answer 46

He explains that we afford primacy to ascertaining beyond doubt the impact of licences on 3rd parties because it suggests a view of land law that is primarily geared towards promoting the exchange of land since it is only in the context of such exchanges that 3rd party issue becomes relevant

but this view of land as a resource in the satisfaction of basic human needs + law plays important role in distribution + protection of that resource is not considered as part of this enterprise yet equally valid way of describing what law is about

consistent with Anderson’s view that post 1925 land law largely premised on assumption that the primary justification for the study of land law lies in its usefulness as an introduction to conveyancing

Question 47

Dewar ‘licences and land law: an alternative view’ (1996)

further crucial premise of conceptual framework and criticm of covert interest of

Answer 47

‘free alienability of land’ requires both as necessary + sufficient condition a substantive land law structure of impeccable orderliness

assumption that conceptual tidiness is essential to promote free transfer of land may be largely false;

and to the extent that it is true , it would protect the security of interests of a selection of financial institutions - degree of protection should be discussed rather than covertly advanced through conceptual debate

Question 48

Dewar ‘licences and land law: an alternative view’ (1996)

further crucial premise of conceptual framework and criticism of covert interest of

Answer 48

‘free alienability of land’ requires both as necessary + sufficient condition a substantive land law structure of impeccable orderliness

assumption that conceptual tidiness is essential to promote free transfer of land may be largely false;

and to the extent that it is true , it would protect the security of interests of a selection of financial institutions - degree of protection should be discussed rather than covertly advanced through conceptual debate

Question 49

Battersby contractual and estoppel licences as proprietary interests in land

Answer 49

PE a mechanism by which informally proprietary interests of an orthodox kind may be created

contract + grant likewise mechanism but those mechanisms are operated by parties themselves + require compliance with formalities

PE needs intervention of the court for the ultimate proprietary interest to be crystallised and properly defined

court has no jurisdiction and need no invent proprietary interests + cannot declare a licence to have proprietary effect when a similar right created expressly by the parties has merely personal effect

Question 50

‘[The contractual licence] nowadays hovers ambivalently on the threshold of property, often performing much the same role and evincing some of the same characteristics as conventionally recognised proprietary rights’ (Kevin Gray) Discuss.

Intro

Answer 50

The above statement is inaccurate for several reasons. First, the sentiment that nowadays, the contractual licence hovers ambivalently on the threshold of property is rejected – though that may have once been the case, the contractual licence is now firmly out of the property territory following Ashburn Anstalt v Arnold. Secondly, the fact that the contractual licence has much of the same characteristics as a property right, does not make it so; the presence of the constructive trust and the fact that this creates a new right, rather than a property right, means the inner sanctum of property remains undefiled – and should remain so.

Question 51

‘[The contractual licence] nowadays hovers ambivalently on the threshold of property, often performing much the same role and evincing some of the same characteristics as conventionally recognised proprietary rights’ (Kevin Gray) Discuss.

‘Licences hover on the threshold of property’

Answer 51

The claim that the contractual licence ‘nowadays hovers ambivalently on the threshold of property’ was, as a matter of law, once correct. Although King v David Allen held that a licence was not an interest in land as far back as 1916 (per Lord Buckmaster), Errington v Errington sought to depart from this orthodoxy to court the notion that a contractual licence could take on some of the characteristics on an interest in property. In that case, the court prevented the widow from evicting her daughter-in-law from the property, even though she was not a tenant, in light of the fact that she had ben granted a licence to stay there by the father-in-law on condition that she (and the son, who was her husband) kept up mortgage repayments on the house. The licence thus became binding on a third party, a successor in title – just like an interest in property. Denning LJ concluded (Somervell LJ agreeing) that because of Equity, a contractual licence cannot be revoked by breach of contract (and specific performance may be available) – neither the licensor nor his successors in title could ignore the contract except a purchaser for value without notice, thus conflating the availability of a remedy for the rights enforcement with its nature.

Attempts to elevate the status of the contractual licence into that of a proprietary interest continued. In Binions v Evans, Lord Denning, this time dissenting, said that Mrs Evans could be conceived of as occupying the cottage under an irrevocable licence, taking place as an equitable interest in land.

Question 52

‘[The contractual licence] nowadays hovers ambivalently on the threshold of property, often performing much the same role and evincing some of the same characteristics as conventionally recognised proprietary rights’ (Kevin Gray) Discuss.

Licences do no hover ambivalently anymore

Answer 52

However, it is no longer the case that we can say that a contractual licence ‘nowdays hovers ambivalently on the threshold of property’. If anything, it has cemented itself very un-ambivalently within the realm of contract. Though Lord Denning’s views on the proprietary ffect of contactual licences continued to be applied for some time, they were applied with reluctance; in Re Sharpe, Browne-Wilkinson J expressed considerable sympathy with the 3rd party purchaser, but he felt constrained by authority to hold that the licence conferred some equitable interest under a constructive trust This differs from Lord Denning’s approach because it is indirect enforceability vs direct enforceability. This state of affairs could indeed be fairly described as ambivalent, but ever since Ashburn Anstalt v Arnold, which held that the statement in Errington that contractual licences were binding upon all but a purchaser for value without notice was wrong and per incuriam, the contractual licence has been very un-ambivalently non-proprietary. Asburn ended a dangerous flirtation with the unorthodox, and it is clear that contractual licences are not to be regarded as interests in land (IDC v Clark) - they are not capable of binding the respective successors to the parties to the contract, as no interest in land or proprietary interest would subsist.

Question 53

‘[The contractual licence] nowadays hovers ambivalently on the threshold of property, often performing much the same role and evincing some of the same characteristics as conventionally recognised proprietary rights’ (Kevin Gray) Discuss.

Support for not regarding the contractual licence as proprietary based on statute

Answer 53

Yet, our argument that contractual licences are very firmly non-proprietary derives support not only from the case law, but from statute too. Section 4(1) LPA 1925 prevents the creation of new proprietary interests which did not exist before 1926. It is not disputed that before 1926 contractual licences were regarded as personal (King v David Allen); the list of proprietary interests is finite (numeus clausus). In flirting with the idea that a contractual licence would be conceived of as an equitable interest in land in Binions v Evans, Lord Denning expressly derogated from s. 4(1) LPA. Indeed the courts in general seem reluctant to tackle the full implications of s.4(1) LPA - it was not cited and was ignored by the courts in Ashburn Anstalt v Arnold. Hill argues that in light of this, not too much significance should be attached to s. 4(1). Yet, this is short-sighted. Numerus clauses is a key principle underpinning much of English land law - it provides certainty as to what interests exist over land for purchasers for value and thus facilitates economically efficient transactions. To undermine this would be a grave error.

Question 54

‘[The contractual licence] nowadays hovers ambivalently on the threshold of property, often performing much the same role and evincing some of the same characteristics as conventionally recognised proprietary rights’ (Kevin Gray) Discuss.

‘the contractual licence performs much the same role and has similar characteristics to a property right. Therefore, it hx

Answer 54

this is a non-sequitur: just because a contractual licence performs much the same role and has similar characteristics as conventionally recognised proprietary rights does not mean it hovers on the verge of being a property right. This ignores the presence of the constructive trust or proprietary estoppel that brings about these characteristics.

In Binions v Evans, the majority held on a constructive trust, this trust being imposed to give effect to their contractual obligation that they would take the property rights of Mrs Evans, reflected in the fact that they paid a lower price for the property as a result. Though the applicability of the constructive trust has been restrained somewhat, with Fox LJ in Binions saying that it should only be imposed when a purchaser expressly undertakes to give effect to a particular interest, and it being held in Ashburn that a constructive trust could not be imposed unless the conscience of the estate owner was affected, it remains the case that just because a licence can be exigible against a third party purchaser for value, does not mean it is proprietary - it may simply be a constructive trust

Hill maintains that, if, as a result of the imposition of a constructive trust, a purchaser is bound to give effect to the terms of the contractual licence, the licensee’s interest becomes convoluted, via the back door into a proprietary right. Yet, this is unconvincing - just because it may share proprietary characteristics, namely that it binds a party that was not in the original conveyance, does not mean that it hovers on property’s threshold. Rather, as McFarlane argues, the right which the constructive trust gives effect to is not a proprietary right at all, but a new right against C which protects B’s enjoyment of the proeprty (NB is this even proprietary - would it bind D??); there is no need for B to show that his original right is proprietary, or even that he had any right before the transfer to C. Post Ashburn, this seems to be accepted: the CT gives effect not to the licence itself, but rather to a new right of B which arises only in response to the particular conduct by C. This is exemplified by Lyus v Prowsa where C’s conduct was deemed sufficiently unconscionable to generate a new right in B, even though B had no right at all against A before the sale to C.

NB ‘equity acts in personam’

Question 55

‘[The contractual licence] nowadays hovers ambivalently on the threshold of property, often performing much the same role and evincing some of the same characteristics as conventionally recognised proprietary rights’ (Kevin Gray) Discuss.

Should licences become proprietary?

Answer 55

Law of property must balance the concern for certainty of tenure and certainty for a purchaser for value with the desire to generate fair outcomes in individual cases, particularly those involving more vulnerable party, such as Binions v Evans. S. 4(1) shows us that the concern has previously been in favour of promoting security, in order to facilitate the transfer of property. If we are to repeal/amend S. 4(1) then we must ensure that the conditions in which new rights against C arise are not relaxed to such an extent that they subvert aforementioned policy reasons behind having a limited list of property rights (McFarlane)

Question 56

‘[The contractual licence] nowadays hovers ambivalently on the threshold of property, often performing much the same role and evincing some of the same characteristics as conventionally recognised proprietary rights’ (Kevin Gray) Discuss.

Conclusion

Answer 56

First part of Gray’s statement is correct in pre-Ashworth world, even if the reasoning used to substantiate this conclusion (fact that licences share similarities with proprietary interests) results in a non-sequitur. But, it is clear that contractual licences are clearly within the contractual sphere; though occassionally, they may be enforced against a 3rd party, for value via the medium of constructive trust or proprietary estoppel, this does not make the inherent nature of the contractual licence proprietary.

If the licence were truly proprietary, then there would be no need for the operation of these two doctrines in the first place. The fact that there is space for such doctrines show as that the contractual licence is, as its name suggests, contractual only and not proprietary.

Question 57

Is it time to reconsider the view that a contractual licence is binding on third parties?

Introduction

Answer 57

The current view is that contractual licences are personal, not proprietary, and therefore cannot bind third parties. Ashburn Anstalt v Arnold reaffirmed the orthodox view established in King v David Allen and Clore v Theatrical Properties highlighting the ‘important and intelligible’ distinction between purely personal interests to use land and interests in land.

I argue that (1) the current view properly upholds the fundamental distinction between personal and proprietary rights, given the almost infinite ways in which land can be used, because there must be some category of rights that gives the user permission to be on the land without conferring proprietary status. I argue that (2) Denning LJ in Errington v Errington erred in law by reasoning that contractual licences were proprietary (NB ARE PROPRIETARY AND BINDING ON 3RD PARTIES THE SAME THING?) and that (3) the ‘Ashburn Anstalt’ constructive trust is not really a trust at all. The constructive trust concept is being used to enforce a new personal right in narrow cases of unconscionability, for example in Binions v Evans.

Licences should not be seen as ‘flexible, dispute settlement mechanisms’ and the boundary between licences and proprietary rights should be drawn giving weight to the personal nature first established in Thomas v Sorrell, distinguishing it from proprietary rights such as leases in order to maintain the overall coherence of Land Law and strengthening the clear rules and principles upon which individuals and conveyancers can plan their activities.

Question 58

Is it time to reconsider the view that a contractual licence is binding on third parties?

1. The nature of contractual licences

Definition + case law

Answer 58

A contractual licence is a licence granted by the terms of a contract. Lord Green, in Winter Garden Theatre v Millennium Production, clarifies that, ‘a licence created by a contract is not an interest. It creates a contractual right to do certain things which otherwise would be a trespass.’ This definition incorporates the nature of a licence first laid out in Thomas v Sorrell, which ‘passeth no interest… but only makes an action lawful, which without it had been unlawful’ with the ordinary contract law principles. The contractual licence creates a liberty to enter and use the land by virtue of this permission but it does not create a right, nor should it bind third parties.

Question 59

Is it time to reconsider the view that a contractual licence is binding on third parties?

1. The nature of contractual licences

must be distinguished from leases

Answer 59

It should not bind third parties because the licence can be distinguished from the lease which does bind third parties and is an interest in land rather than a personal interest. Lord Buckmaster LC in King v David Allen described the ‘contract between appellant and the respondent which creates nothing but a personal obligation.’ In this case, the cinema granted a licence to an advertising company to place adverts around the cinema for an annual fee. The licensor then leased the property to another company, which did not refer to the original agreement with the licensee. The licensee attempted to put up posters but was forcibly stopped by the other company from doing so. This case is significant because a licence did not qualify as a proprietary right since it did not deliver sufficient control over the land. The case exemplifies the importance of considering the distinction between personal and proprietary rights in answering the question because only proprietary rights were found to be enforceable against third parties. Finally, a proprietary right could have been created through clear wording in the contract as a lease. Lord Buckmaster rested his reasoning on the intentions of the parties, clarifying, ‘I find it difficult to see how it can be reasonably urged that anything beyond personal rights was ever contemplated by the parties’. Lord Loreburn similarly found that the document ‘[did] not create any interest in land’. Creating such an interest would have amounted to a lease. A similar view was held by Lord Wright in Clore v Theatrical Properties, in which he decided that the ‘document [did] not convey any interest in land but is merely a personal contract embodying a licence.’ The notion of ‘embodying a licence’ is significant in the demarcation between licence and lease. This demarcation is seen sharply in the Street v Mountford.

sharply in the Street v Mountford.
This case reasserted the need for an objective approach and the description given by the parties as a lease or a licence is no longer determinative of the legal nature of the agreement. This case exemplified the need for clear rules to determine the nature of an agreement. Lord Templeman said at p. 819, ‘If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting that they only created a licence.’ A number of factors may be taken into account when determining this agreement in order to correctly identify whether it is a lease or a licence, illustrating a key conceptual difference. Contractual licences should not bind third parties in order to sustain this key conceptual difference.

Question 60

Is it time to reconsider the view that a contractual licence is binding on third parties?

2. 3 criticisms of Lord Denning’s reasoning in Errington v Errington [1952]

Answer 60

The word ‘reconsider’ in the question draws attention to the change of the law’s view on this matter. Denning LJ in Errington v Errington departed from orthodoxy by endorsing the proposition that contractual licences are proprietary. I argue that (i) Denning’s argument as a whole is invalid – the conclusion does not follow from the premises, (ii) that Denning’s departure was ‘blasphemy’ and ‘revolutionary’ rather than ‘normal evolution’ since it did not cite authority in support of the conclusion that contractual licences are proprietary, and (iii) Denning failed to consider the proviso to Section (4)(1) of the Law of Property Act 1925 which barred the creation of a new equitable interests.

(ii) In this case, Mr Errington bought a house for his son and daughter-in-law, paying £250, and the remaining £500 coming from a mortgage, paid off with 15s/w on the understanding that they could stay in occupation as long as they paid the mortgage and that when all the instalments were paid it would be theirs. Denning LJ identifies that they ‘had a mere personal privilege to remain there’ and stressed that they were, ‘not bare licensees’ but, ‘licensees with a contractual right to remain there’. Denning argued that the fusion of equity and law granted contractual licensees equitable remedies and that therefore they had an equitable right to remain. However, Denning’s reasoning goes too far, ruling that, ‘neither the licensor nor anyone who claims through him can disregard the contract except a purchaser for value without notice’. It does not follow from the fact that the equitable remedies are granted to protect a right that the right is proprietary and capable of binding third parties. This was made clear by Lord Wilberforce in National Provincial Bank v Ainsworth: ‘the fact that a contractual right can be specifically performed, or its breach prevented by injunction, does not mean that the right is any less of a personal character’.
(iii) Lord Denning’s conclusion is incompatible with King v David Allen and Clore v Theatrical Productions which held that a contractual licence could not bind third parties. Cheshire cites the ‘long history of licences binding third parties’ to argue that ‘Errington v Errington was a reasonable expansion of the equitable principle that a contractual and specific claim to land is enforceable against third parties to the same extent as any other equitable interest’. However, Cheshire draws attention to examples of proprietary estoppel (a method for the creation of rights over land) rather than a licence (a way in which a person may enjoy some right or privilege over the land of another person). For example, the 19th century cases Plimmer v Wellington Corporation recognised that a licensee who has entered the land with the acquiescence of the licensor and has altered his position for the worse possesses an equity to specific performance against licensor personally and Dillwyn v Llewelyn established that equity based on acquiescence of the licensor binds successors in title to the same extent as an estate contract. Both cases are examples of proprietary estoppel which is a separate doctrine and can gives rise to a right out of the conduct of the parties, usually because of some assurance made which is relied upon by the person claiming the right. This informally creates an interest in land in the absence of a deed or signed writing and is close to the doctrine of constructive trusts, which I argue should be used restrictively in limited cases of unconscionability. It is intrinsically different in nature to a licence which is a mere permission from the owner, given to another, to use that land for some purpose.
(ii) Denning did not consider Section (4)(1) of the Law of Property Act 1925 which reads, ‘an equitable interest in land shall only be capable of being validly created in before such commencement’. This means that no new equitable interests shall be created after 1925. Cheshire argues that, ‘there shouldn’t be a closing date for the invention of new legal concepts’. However, elevating contractual licences to status or property interest would impede investigation of title, contrary to the purpose of the 1925 Act. I argue that Denning erred by going against the express provision of Parliament and I argue that it is not necessary to ‘reconsider’ whether a contractual licence should bind third parties because it is necessary to strengthen the ‘important and intelligible’ distinction between personal and proprietary rights.

Question 61

Is it time to reconsider the view that a contractual licence is binding on third parties?

3. The Ashburn Anstalt Constructive Trust

Answer 61

Finally, Binions v Evans raised questions over instances in which it would be ‘inequitable’ for the plaintiffs to turn the defendant out contrary to the stipulation subject to which they took the premises. I argue that Cheshire’s cases of proprietary estoppel and the constructive trust used in Binions v Evans, which was regarded as legitimate in Ashburn Anstalt v Arnold, are similar instances in which the law should enforce a right which will bind third parties. In Binions v Evans, the claimant who bought the land had notice of the defendant’s occupation and paid less for the land as a result of this knowledge. This reduction in price serves as an evidence of an undertaking to respect that licence. The doctrine of constructive trusts is being used to enforce a personal right against a new owner who undertakes to respect the licence (EXPLAIN WHAT HAPPENS!!) The nature of the ‘unconscionable’ purchase is significant enough to side step the personal nature of the contractual licence. The contractual licence does not cease to be personal in nature not should it bind third parties. It can bind a specific third party, person or class of persons, in a very narrow factual instance.

Question 62

Is it time to reconsider the view that a contractual licence is binding on third parties?

Conclusion

Answer 62

The analysis put forward in Ashburn Anstalt and confirmed in later cases represents the law today. It serves to highlight the fundamental distinction between interests in land and purely personal interests to use land. Licences should not bind third parties because they are not meant to be interests in land. They are fortified in equity to reinforce this personal right. To further conclude, the incoherence brought about by proprietary estoppel and the use of constructive trusts to impose rights on third parties must be seen as mechanisms that give rise to new rights and as separate doctrines. It is therefore not necessary to revisit the view that a contractual licence is binding on third parties.

FEEDBACK - DEFINE WHAT BINDING ON THIRD PARTIES MEANS - arguably binding on third parties is a necessary but insufficient ingredient

Question 63

Theoretical Discussions

Licences

Do contractual licences operate as rights in rem?

Answer 63

• Traditionally considered to be in personam (King v David Allen)
• In Errington v Errington Lord Denning MR said that they could bind TPs
• Settled in Ashburn Anstalt that contractual licences are personal. HOWEVER a CT which does bind TPs may arise in some cases (see below).
• Some say that s.116(b) says that ‘in relation to registered land, … a mere equity, has effect from the time the equity arises as an interest capable of binding successors in title ….’ Some say that a contractual licence is a ‘mere equity’ and therefore is in rem, as per Errington. WRONG: a mere equity usually refers to PE or a right to rescind a contract, and purpose was to clarify (“for the avoidance of doubt”) how it works, NOT turn lcontractual licences into rights in rem.

Question 64

Theoretical Discussions

Licences

Should contractual licences operate as rights in rem?

Arguments for

Answer 64

• Denning’s arguments for making contractual licences rights in rem:
o It’s only lack of formality that prevents them from being rights in rem (formalities are there for a reason- formality functions + numerous Clausus principle)
o Contractual licences are indistinguishable from/usually coincide with proprietary estoppels which are rights in rem. Wrong: Estoppel & contract arise in different way (equity vs common law), have different natures (remedying reliance loss vs facilitative institution), come from different parts of law (equity vs common law). Also PE arguably ought to be personal remedy anyway (Gardner).
o Law already accepts the need to protect performance in specie, as demonstrated by willingness to use injunctions. Tue, but injunctions used to circumvent the idea that licensees have to accept repudiation under Wood v Leadbitter.
o Protecting performance in specie is v important due to social factors and arguably human rights e.g. right to private and family life which is engaged in home eviction cases e.g. see mortgage cases, and can therefore provide the strong reason needed before a new type of right in rem can be created (under numerous clauses etc), unlike commercial licences. This reflects case law: all the cases saying that contractual licences are rights in rem are family property cases: Errington, Binions v Evans (though decided on a CT basis, obiter said that licence was right in rem), whereas in commercial context the right is held to be in personam: King v David (licence to advertise on a building subsequently bought by TP), Allen & Ashburn Anstalt. However the effect of this will be minimal due to proactive role of law (following Street v Mountford) in conceptualising virtually all licences to exclusively occupy as leases, which is a right in rem anyway.

Question 65

Theoretical Discussions

Licences

Should contractual licences operate as rights in rem?

Arguments against making contractual licences rights in rem:

Answer 65

o A right arising from a contract is consensual between parties to it & therefore must be in personam, per Fox LJ in Ashburn. WRONG: contracts can give rise to proprietary rights if compliant w/necessary formalities e.g. disposition of interest in land (only evidenced in writing- s.53(1)(b))
o Informal and unpredictable rights, such as contractual licences, must not be recognized as rights in rem, because purchasers cannot be expected to appreciate where they stand in regard to such rights. True, though this happens w/ PE/CT
o legal policy’s default position is in personam, so as to limit the extent of these harms; but this position can be reversed, and the right recognized as in rem, where there is a strong enough countervailing reason. (Gardner). Reflects numerus clauses. Arguably 4th argument above provides such a reason.

Question 66

Theoretical Discussions

Licences

Can contractual licences be held on trust?

Answer 66

• Constructive Trusts
o In Ashburn Anstalt Fox LJ held that a constructive trust could arise in situations where a TP buys the property & where B has a contractual licences. He emphasised ‘unconscionability’, saying CT would arise whenever the purchaser’s conscience is bound (deliberately loose). Subsequent cases have refined this to say there will be a CT whenever the purchaser promises to honour the licence (discussed in IDC v Clark & Lloyd v Dugdale).
o Thus a promise is necessary, but Fox LJ in Ashburn says the court won’t be eager to discover it, e.g. sale ‘subject to licence’ ≠ necessarily imply a promise to honour the licence-perhaps just notification to buyer. Contrast to readiness to find such a promise in Binions v Evans, where Denning MR placed great emphasis on words ‘subject to’.
o However there are questions about whether this CT is actually a trust at all, or just a ‘convenient’ label.
♣ In Binions v Evans, Denning MR said that there was no trust, but merely an obligation on the purchaser to honour the licence. Since licence is only a right in personam (see above) this would not have bound TPs. Explanation? Not clear where this right comes from. Cant be explained on basis that Denning thought a licence is a right in rem, since if this was the case there would be no need to require the purchaser to undertake to honour the right. Can’t be PE, since that isn’t mentioned
♣ In Chattey v Farndale Holdings, a promise to honour a purchaser’s lien led to a lien being given to B, and not merely being held on trust for him. This meant that since B hadn’t registered it, it was ineffective against the next purchaser of the estate (who did not promise to honour it).
♣ V odd- a CT should make the right effective against all future purchasers. Maybe best solution would be to use PE.
o Bright criticises this use of the CT: A trust means that equitable interest is vested in a different person to the legal title-holder. However in Binions v Evans type CTs, the title to the property (freehold) is held legally and beneficially by the purchaser. The thing being held on trust is purportedly the licensee’s right to remain, but there is no suggestion that anyone other than the licensee holds the legal and equitable title. Certainly the purchaser doesn’t hold legal title to the licence. Where, therefore, is the trust? Also the emphasis on conscience, together with the conceptual problem, suggests courts are using CT in a discretionary, remedial fashion which isn’t allowed under English law. Thirdly, Binions v Evans is a new category of CT, and doesn’t fit into any of the previous ones. Due to numerus clauses principle (limits ways of acquiring interests in land, since the acquisition of interests makes the land less marketable), there should be some good reason for creation of a new mode of acquiring a right in rem. None given (unconscionability doesn’t tell us anything). Bright says ‘fraud’ is the rationale used in Rochefoucauld type CTs, but that’s different to here because that deals w/creation of rights, whereas Binions deals w/ pre-existing ones.
o Alternatives to the CT solution? Economic torts of interference where purchaser knows that transfer of the property will lead the licensor to breach his contract with the licensee. Also licensee could have a right to claim breach of contract which he can enforce under Contracts (rights of TPs) Act 1999.

Question 67

Camelot Property Management Ltd v Roynon (Bristol County Court, 24 February 2017),

(OVERLAP WITH LEASES)

Answer 67

court held that the occupier was a tenant not a licensee.

Camelot was engaged to find guardians for a former elderly people’s home owned by Bristol City Council. Roynon moved in as a guardian in 2014. When Camelot sought possession, Roynon claimed to have a tenancy, despite his written occupation agreement being described as a “licence”. The court attached importance to the fact that Roynon had exclusive possession of two rooms and a key to them; his name was also on the doors and he had stayed in the same rooms for three years without being asked to move. He was therefore a tenant.

NB contrast with Camelot Guardian Management Ltd v Khoo [2018] and Ludgate House Ltd v Ricketts (Valuation Officer) [2018]

Question 68

Camelot Guardian Management Ltd v Khoo [2018]

OVERLAP WITH LEASES

Answer 68

guardian Heiko Khoo occupied three rooms in a building owned by Westminster City Council.

The agreement granted Khoo the right to “…share living space in a building”. The fact that he was shown a particular room, asked to occupy it and had occupied it ever since did not mean that the words of the agreement should not be given their ordinary meaning.

The agreement spelled out that its purpose was to grant a non-exclusive licence to share occupation for security and to protect against trespassers and damage. It was essential to this purpose that the arrangement should not be a tenancy. The fact that Camelot in practice did not move guardians around did not mean it did not intend to honour this purpose. It was therefore a licence.

Question 69

Ludgate House Ltd v Ricketts (Valuation Officer) [2018]

OVERLAP WITH LEASES

Answer 69

Organisations offering guardian services promote a further advantage: properties used wholly or partly for the purposes of living accommodation will not be subject to non-domestic rates. In this case, the court concluded that a property accommodating a considerable number of guardians was not being used as “living accommodation” and was still subject to non-domestic rates. In reaching that conclusion, it held that the occupiers were only licensees.

Question 70

Conclusion from comparing the two Camelot cases and Ludgate?

NB USE IN ESSAY ON LEASES/LICENCES -PARAGRAPH ON PROPERTY GUARDIANS

Answer 70

So far, the only conclusion that we can reach is that cases turn on their own facts. The likely outcome of any specific case is therefore currently unclear. What is more certain is that with an increasing number of guardian providers operating in the UK, we are likely to see further developments in the law in this area.

My view is that we need to reinstate the division which is of real significance to purchasers + the grantor must be able to grant a licence which is revocable though grants exclusive possession - to grant a lease would be to frustrate the parties’ intentions!!

Question 71

Commentary on Dutton

Intro/facts

Answer 71

Dutton allowed a contractual licence to transcend its traditional status of a mere contractual right and take on the more expansive status of a property right, so as to be effective against third parties in general.

Dutton held that a contractual licensee (‘licensee’), whether or not she/he is in factual possession of the land the subject of her/his licence, will have access to a right of possession against trespassers if such a right is necessary to give effect to her/his contractual rights of occupation.

Question 72

Commentary on Dutton

Merits of the result in Dutton

(nb an Australian article)

Answer 72

Momentarily putting to one side the Court’s underlying reasoning in Dutton, that case produced a desirable result—the fortification of a licensee’s contractual right with an ad hoc possessory right—for a number of reasons.

1. Firstly, a licensee’s contractual rights are given real force rather than left nugatory: just as in Dutton, if X has a licence to lop trees on Y’s land, but Y fails to remove trespasser Z from the land, an ad hoc right of possession against Z allows X to enjoy her/his contractual right to lop the trees.
2. more broadly, contractual rights and property rights are both essential to an efficient economy: the former create trust between parties in business dealings by ensuring their expectations are met, while the latter ensure that parties are able to retain the spoils of their transactions without the trouble, for example, of theft. Hence X’s ad hoc possessory right complements her/his contractual right, promoting economic efficiency: X will not hesitate to pay Y for the right to lop the trees if she/he knows her/his right will be realised. Without a possessory right to support her/his contractual right, however, an economically inefficient outcome would arise wherein X is reluctant to transact with Y even though she/he is willing to pay for the right to lop the trees. Doubtless X can sue Y for breach of contract, but this too is inefficient: X, unable to sue Z for trespass, must (1) initiate legal proceedings against Y and (2) wait on an already recalcitrant Y to sue Z for trespass before (3) X can finally enjoy her/his contractual right to lop the trees. Although X’s contract is economically valuable in that it can be sued upon, its fundamental purpose is not realised. With an ancillary right of possession, however, X can directly sue Z for trespass and more speedily enjoy her/his contractual right.

UK law had traditionally refused to provide a licensee out of possession, beaten to the land by trespassers, with an ad hoc possessory right to supplement her/his contractual right of occupation. This anomaly leaves a licensee’s contractual rights seemingly ineffective simply because she/he is unable to take possession of the land before trespassers can, and therefore lends support to the adoption of Dutton as the law in Victoria and indeed Australia. Before rushing to adopt Dutton, however, there is one important question: is the current common law of Australia capable of giving effect to the contractual rights of a licensee beaten to the land by trespassers, without adopting Dutton?

Question 73

Commentary on Dutton

Alternatives to adopting Dutton: existing remedies and potential rights in Australia

Answer 73

A licensee not in possession may be able to seek an injunction, grounded in the tort of interference with contract, to prohibit trespassers from interfering with her/his contractual rights.6As this tort can, however, only be established where the trespassers knew of the licensee’s contractual rights and intended to interfere with those rights, an injunction may rarely be available to a licensee:7although Z may have intended to prevent X from lopping trees, Z may not have intended to interfere with X’s contractual rights per se.

The Australian common law, within the bounds of its existing principles of contractual interpretation,8may already be able to afford a licensee with a possessory right ancillary to her/his contractual rights of occupation. I propose that it is open to Australian courts to imply into a licence a right of the licensee to exercise, as agent of the licensor, the licensor’s right of possession against the specific trespassers already on the land at the time the licence is granted. An implied right of agency is justified as it is only fair to assume that a licensor intends that the licensee actually enjoy her/his contractual rights. With the licensee acting as the licensor’s agent, it would technically be the licensor exercising the right of possession. That is, the right of possession would still vest in the licensor, but could be enforced by the licensee: strictly speaking, the licensee herself/himself would have no property rights. An implied contractual right of agency, true to principles of contractual interpretation, would merely give effect to the contract itself rather than recognise new ad hocrights. An implied right of agency may appear to simply involve a roundabout application of Dutton, in that it is a right against third parties. There are, however, key differences between an implied right and a property right which Duttonconfers upon a licensee.

Question 74

Commentary on Dutton

Alternatives to adopting Dutton: existing remedies and potential rights in Australia

Benefit 1 of implying an implied right of agency: would be in personam!

Answer 74

Firstly, as above, a licensee’s right of agency would only bind specific third parties (trespassers) already on the land: X would be able to sue Z who is already on the land at the time X’s licence is granted, but X would be unable to sue a new trespasser who appears after X’s licence is granted. Dutton, on the other hand, confers rights against third parties in general: X is able to sue not only Z, but also new trespassers. It must be recognised that a right enforceable against third parties is not necessarily a property right. Indeed, applying Blackstone’s definition of property—‘despotic dominion which one man claims over the external things of the world, in total exclusion of the right of any other individual in the universe’ (Commentaries vol 2,2) —a licensee’s implied right of agency would not be a property right because it binds only specific third parties who are interfering with her/his right of occupation at the time the licence is granted rather than third parties in general. The licensee’s right of agency is not a right of exclusive possession in rem: the essence of a property right.11It is merely in personam:against identifiable individuals.1

Question 75

Commentary on Dutton

Alternatives to adopting Dutton: existing remedies and potential rights in Australia

Benefit 2 of implying an implied right of agency: inherently circumscribed - therefore would not bind third parties the licensor willingly invited onto the land

Answer 75

Secondly, as the licensee’s rights are determined as at the time the licence is granted, they are circumscribed invariably because they bind only the specific individuals already on the land. Thus, the licensee’s implied right of agency cannot expand to bind future third parties whom, for example, the licensor herself/himself may have willingly invited upon the land.

Question 76

Commentary on Dutton

Alternatives to adopting Dutton: existing remedies and potential rights in Australia

Benefit 3 of implying an implied right of agency: not invoked ad hoc…

Answer 76

Thirdly, the licensee’s implied right of agency is not invoked ad hoc by third parties’ interference with the licensee’s rights of occupation, but comes into existence together with the licence granted to the licensee. Contrasted with the traditional view that a licensee has (a) a right of occupation arising from contract and (b) a right of possession arising only from the act of possession,13an implied right of agency would arise solely from the contractual licence, whether or not the licensee is in possession

Question 77

Commentary on Dutton

Alternatives to adopting Dutton: existing remedies and potential rights in Australia

Flaws of implied right of agency

(1) expanding sphere of contractual rights by violating doctrine of privity
- response
(2) (not sure..)

Answer 77

(1) while on the one hand keeping shut the closed number (numerus clausus)14of legally recognised property rights, it expands the sphere of contractual rights by violating the doctrine of privity whereby only those parties to a contract can be bound by that contract.

One may note, however, that no new rights against third parties are created: rather, the licensee’s right of agency merely entitles her/him to enforce the licensor’s existing rights against third parties.

(2) Another perceived flaw is that an implied right of agency, as defined above, is unable to bind trespassers who appear on the land after the licence is granted, but before the licensee takes possession. On the other hand it is arguable that a licensee should give effect to her/his own licence, to the extent that she/he is able, by taking prompt possession of the land upon grant of her/his licence. Such a licensee at least has a chance of taking possession, unlike a licensee who is beaten to the land.

Question 78

Commentary on Dutton

The flaws of Laws LJ’s reasoning in Dutton

1. defies precendent

Answer 78

Although the result in Duttonwas desirable, it manifestly contradicted UK domestic precedent (Hunter v Canary Wharf Ltd) by providing a licensee not in possession with rights against third parties.

Crucially, the majority reasoning of Laws LJ, on which this result was reached, also appears to have several deficiencies.

Question 79

Commentary on Dutton

The flaws of Laws LJ’s reasoning in Dutton

2. obliterates long-standing distinction between right of mere occupation and right of possession

Answer 79

Firstly, Laws LJ’s remark, that it is only logical for a licensee out of possession to have the same rights as a licensee in possession, obliterates the long-standing distinction between a right of possession and a right of mere occupation (Emma Lochery, ‘pushing the boundries of Dutton?) Despite the former being an interest in land and the latter a mere personal permission to enter the land for a specific purpose (as emphasised by Chadwick LJ’s dissenting judgment in Dutton), Laws LJ conflates the two, failing to recognise each right’s distinct source. (NB cite Swadling here). His amalgamation of possession and occupation implies that a licence can even bind a licensor’s successors in title if necessary to give effect to a licensee’s rights of mere occupation, which is an absurd proposition.

Question 80

Commentary on Dutton

The flaws of Laws LJ’s reasoning in Dutton

3. Laws LJ did not distinguish between degree of possession

Answer 80

Secondly, Laws LJ did not distinguish degrees of possession. What degree of possession must the licensee have to be entitled to sue trespassers? Using the example of a single cinemagoer who holds a ticket (licence) to watch a film, but is only one of many such licensees, Dobbs notes it is unreasonable for the single cinemagoer to be afforded rights in personam against a trespasser. The cinemagoer may have rights a a trespasser, however, where she/he has hired the entire cinema for herself/himself.

Question 81

Commentary on Dutton

The flaws of Laws LJ’s reasoning in Dutton

4. Laws LJ did not distinguish between degree of possession

Answer 81

Thirdly, it is unclear from Laws LJ’s judgment what specific degree, if any, of interference with the licensee’s contractual right is sufficient to invoke an ad hoc possessory right. Is it sufficient for the trespasser merely to interfere with the licensee’s right of occupation, or must she/he render the licensee’s right useless? Laws LJ leaves this question unanswered and thus leaves uncertain the scope of a licensee’s ad hoc possessory right, in terms of how many trespassers it could cover.

Question 82

Commentary on Dutton

The flaws of Laws LJ’s reasoning in Dutton

5. Laws LJ’s reasoning renders the tort of interference with contract partially irrelevant

Answer 82

Laws LJ’s reasoning renders the tort of interference with contract partially irrelevant. Given that on Laws LJ’s reasoning a licensee may sue any third party without rights of possession equal or superior to her/his own, why should a licensee sue trespassers for interference with contract when she/he can simply sue them in trespass? That is, Laws LJ’s reasoning implies that a third party need not satisfy a fault element in interfering with the licensee’s contractual rights of occupation: presumably even an unintentional trespasser could be vulnerable to a licensee’s action in trespass.

Question 83

Commentary on Dutton

The flaws of Laws LJ’s reasoning in Dutton

6. ‘Discretionary remedialism’

Answer 83

Lastly, where a licensor fails to remove trespassers from her/his land, a licensee can always compel the licensor to give effect to her/his obligations by suing for breach of contract (despite, as above, this process being inefficient). One cannot help but detect a hint of ‘discretionary remedialism’ (Birks) in the judgment of Laws LJ, who seems to have decoupled the remedy of an order for possession from its prerequisite liability: a trespasser’s intentional interference with the landowner-licensor’s possession rather than the licensee’s occupation (Swadling). With respect, it was not open to Laws LJ to affirm an order for possession for a mere licensee. Laws LJ’s reasoning, being preoccupied with providing a licensee with a possessory right against trespassers, has opened up a number of ambiguities in the law concerning a licensee’s rights against third parties.