licenses

Question 1

what is a licence?

Answer 1

permission granted by the occupier of land to a person to do something on that land which would otherwise be a trespass. licenses are not an estate or interest in land and are generally understood as personal rather than proprietary interests

Question 2

are licences able to be supported by caveats

Answer 2

no - they are a personal interest

Question 3

does a licence run with the land

Answer 3

no, it only binds the licensee

Question 4

different types of licences confer different kinds of privileges, how so?

Answer 4

• may be merely a defence to an action in trespass and a right to a reasonable period to leave the land after revocation e.g. a courier coming onto the property
• or may be part of a contractual relationship (supported by valuable consideration) or give rise to an equitable estoppel

a licensee with a right of occupation and sufficient rights of control over land has/may have a right to bring trespass action against third parties

Question 5

what are some examples of licences

Answer 5

they vary enormously in their terms and complexity:

• social invitation to visit
• implicit permission to enter a garden and approach the door of a house
• exclusive right to use a “booth” in an airport terminal as a business base
• right for contractors to enter on property to complete work
• purchase of a ticket to see a show

Question 6

what recent changes have occurred in the development of licence law

Answer 6

at common law, licences were:

• easily revocable by the licensor
• were not binding on third parties
• were clearly personal rather than proprietary interest

this has changes to some extent in modern NZ law, although the basic rule remains unchanged, the courts have recognised in certain circumstances they may be harder to revoke and may give interests:

• ability to raise estoppel arguments
• availability of equitable remedies

Question 7

what are the four classifications of licences

Answer 7

1. bare licences
2. licences couples with an interest
3. contractual licences
4. licences supported by estoppel

Question 8

what is a bare licence

Answer 8

• a mere permission to enter for some purpose, given gratuitously by the licensor in circumstances where there is no contract, estoppel, or trust argument
• subject to revocation by licensor at any time
• no formalities required
• purely personal; not assignable

a bare licence “passeth no interest, nor alters or transfers property in any thing, but only makes an action lawful, which without it had been unlawful”

Question 9

what are the two forms of bare licence

Answer 9

1. express - oral or written representation by licensor to allow the licencee onto the land for a specific purpose
2. implied by law - may need to be distinguished from a mere toleration of minor trespass, common example is where a member of the public enters onto land to communicate with landowner. all implied licences are purposive and presuppose some genuine and legitimate reason for the entry

Question 10

what is a licence couples with an interest

Answer 10

• traditionally recognised at common law where permission to enter land is coupled with the grant of a proprietary interest in the land or chattels, e.g. a right to enter to hunt animals - permission to enter for a purpose where that purpose has some greater proprietary interest.

Question 11

it is suggested that the licence coupled with an interest category of licence is unnecessary in modern NZ law because it may be better treated as?

Answer 11

• profit a prendre - going onto land to have some proprietary interest in a part of the land e.g. minerals, hunting, fishing
• contractual licences - contractualisation of property law where they appear as an aspect of a contractual arrangement to enter to remove personal property
• if there is no contract, then as a bare licence

Question 12

what is a contractual licence

Answer 12

• a licence supported by valuable consideration (making it a contract) - consideration does not need to be a periodical payment for use or occupation. takes effect as part of the contract by which it is conferred and is construed in its contractual context.

Question 13

what are some examples of a contractual licence

Answer 13

accomodate diverse situations - limited and temporary as well as extensive and long term uses:

• agreement for use of a motel unit
• use of car-parking spaces in conjunction with leased property
• use of wall space for display of advertising
• enjoyment of land for timeshare units
• rights in some retirement villages
• builders contractor’s right to enter to perform work or services
• admission by ticket to a racecourse, theatre or place of entertainment

Question 14

what is a licence supported by estoppel

Answer 14

• where licensor is precluded by estoppel from revoking or otherwise jeopardising the licence.
• estoppel will be recognised to prevent licensor from acting unconscionably by exercising licensor’s strict legal rights

Question 15

what is the difference between a licence and a lease

Answer 15

a lease is a proprietary interest capable of assignment and binding third parties in certain circumstances. a licence is purely personal.

the decisive test is exclusive possession (a lease has this and a licence doesn’t)

Question 16

what happened in Fatac Ltd v Commissioner of Inland Revenue in regards to the exclusive possession test for determining a licence or a lease

Answer 16

Puhinui Quarries Ltd owned a property, part of which was a quarry. In 1991, Puhinui granted a right to operate the quarry to Atlas Consolidated Ltd for 12 years, renewable for a further 3 years. In 1996, Puhinui entered into an agreement to sell the entire property to Mt Wellington Nurseries Ltd, subject to a “licence” to Atlas. if the occupation right granted to Atlas was a licence and not a lease, Fatac Ltd would need to GST.

The court held Atlas did not have an exclusive right of occupation or access, and there was no clearly defined area of which it has exclusive use = licence.

Question 17

what does exclusive possession mean?

Answer 17

can they exclude others from the defined part of this property for a period of time? if so, it is a lease rather than a licence.

Question 18

what is the difference between a licence and an easement

Answer 18

licences can exist in a wide variety of situations, some of which would not be possible to achieve with easements. easements generally require a closer connection with land and its use. there can be no easement where occupation or possession is given that amounts to use to the exclusion of the owner of the land - easements don’t grant a right of occupation, just an essential right of access.

an easement is an interest in the land that will run with the land and bind subsequent purchasers - it can be used to ensure public access that will continue to be recognised by subsequent purchasers

easements are able to be protected by a caveat

licences generally aren’t binding on subsequent purchasers

Question 19

how is a licence created

Answer 19

• no specific formalities are required
• not a contract for the disposition of land so doesn’t need to follow PLA 2007 s 24 writing requirements
• can be created through written or oral grants or implication of the state of affairs - e.g. opening your gate to let someone in

Question 20

how can a licencee confer sublicences

Answer 20

if acting with the authority of the owners, a person with an exclusive licence who has intention to exercise control over land may confer at least a bare licence on a 3rd party. in contrast, a casual visitor acting on his/her own initiative may not grant a licence or sub-licence

Question 21

in what 5 ways can a licence be determined

Answer 21

• expiry
• occurence of certain events
• breach of condition subsequent
• revocation by licensor
• abandonment

Question 22

how can a licence be determined by expiry

Answer 22

either it will have an express date stipulated when it will end and no notice will be required. in this case, the licence ceases to be a defence to any tort action e.g. trespass after the expiry date.

or, there will be an implied date and the court may need to impute the intention of the parties. the ‘reasonable’ period will depend on the facts of the case e.g. courier not expected to be there 5 hours later

Question 23

how can a licence be determined by the occurence of certain events

Answer 23

certain events are contrary to the nature of a licence and their occurence will determine any licence:

• alienation by the licensor of their interest e.g. decides to sell and burden doesn’t run with the land
• subject matter of the licence is destroyed e.g. theatre to which licensees previously had free admission was burnt down (Scott v Howard), no licence over new theatre
• death of licensor (if a revocable licence, which almost all are)

Question 24

how can a licence be determined by breach of condition subsequent

Answer 24

this is relevant for contractual licences, where the licence is granted based upon an express or implied condition, e.g. condition for “good behaviour” implied into admission tickets for entertainment. a breach of a condition subsequent renders the licence voidable rather than void, so the licensor must give notice of their intention to determine the licence in reliance on the breach.

e.g. at R&V if you breached by bad behaviour they can’t just see and let you stay - they didn’t take a step to void the contract

Question 25

how can a licence be determined by revocation by licensor

Answer 25

depends on the licence

Question 26

how can a licence be determined by revocation by licensor for bare licences

Answer 26

they may be revoked at any time at the will of the licensor without liability for damages. the decision to revoke must be communicated to the licensee to be effective - this may be through express or implicit notice, by the licensor doing some act inconsistent with the continuation of the licence, or by threatening proceedings for trespass.

there is no requirement that the decision to revoke should be reasonable or that the licensor should observe rules of natural justice.

in the us reasonableness may be argued in the case of public places - not in NZ but there may be a claim under NZBORA

Question 27

how can a licence be determined by revocation by licensor for a licence coupled with an interest

Answer 27

this kind of licence is irrevocable

Question 28

how can a licence be determined by revocation by licensor for contractual licences

Answer 28

at common law, they were treated as revocable by the licensor, subject only to liability for damages measured by price paid for the licence (Wood v Leadbitter) but today in NZ, revocability is deduced from the terms of the contract (Half Moon Bay Marina Ltd v Manukau City Council) and are possibly irrevocable.

where there is no express provision, the court can imply the licence is to be irrevocable for the period granted, especially where it is a finite period or for a specific purpose. where there is infinite duration, the court is unlikely to find an agreement is perpetual and usually the licence will be determinable upon reasonable notice.

if the licence contains an express term that gives licensor right to cancel for breach, they must follow notice requirements, effect of cancellation and considerations relevant to a grant of relief under ss 244-264 PLA 2007. PLA 2007 does not cover situations where it is alleged that the licensor is in breach, only where the licensee is alleged to be in breach

Question 29

how can a licence be determined by abandonment

Answer 29

the licensee may determine the lease by abandoning it, no formalities required. the licensee must behave in a way that justifies licensor’s belief that licence has been abandoned (Bone v Bone).

Question 30

what happened in Bone v Bone

Answer 30

the licensees had a long term licence, potentially up to 15 years. 1 month in the licensees moved themselves and all their possessions out of the property. the court found this was not enough to justify the belief the licence had been abandoned because it was so long they could come back in two years and the licensees also paid substantial consideration for the licence.

Question 31

what is the classical approach to licences and estoppel

Answer 31

5 probanda to raise an estoppel argument from Willmott v Barber:

1. mistake: plaintiff must have been mistaken as to their legal rights
2. expenditure or detriment: plaintiff must have made some expenditure or suffered some detriment because of the mistake
3. awareness: representor/defendant must ave been made aware of their own rights (and should therefore have asserted them)
4. knowledge: representor/defendant must know of the mistake made by the representee/plaintiff
5. encouragement/silence: representor/defendant must have encouraged the representee in the expenditure or detriment, or at least stood by silently

Question 32

what is the modern approach to licences and estoppel

Answer 32

courts evaluate estoppel arguments based on only unconscionability - ask whether it would be unconscionable, unfair or unjust to allow something (Westland Savings Bank v Hancock). the 5 probanda of Willmott v Barber are now viewed as guidelines only but remain relevant to the extent that issues or reliance, detriment, benefit and acquiescence are all indicators of unconscionability.

Question 33

what are the remedies under the modern approach to licences and estoppel

Answer 33

where an estoppel argument is established, court has considerable scope for flexibility in the remedy.

proportionality is important: balance between giving effect to party’s expectations and tailoring the remedy to compensate for the detriment suffered.

e. g.
- equitable damages
- right to reimbursement supported by a charge/lien on the land
- transfer of the fee simple to P
- awarding 1/2 of an undivided half-share
- grant of a lease
- recognition of an equitable easement
- rendering the licence irrevocable

Question 34

why are licence and estoppel arguments significant

Answer 34

they may radically enhance an otherwise precarious personal interest - the circumstances of the particular case may require the licence to be upgraded to a proprietary interest. the enhanced interest will then affect not only the original representor but also third parties

Question 35

what is the licensees standing in tort in relation to trespass and nuisance claims

Answer 35

traditionally, the view was that because a licence is purely personal, it does not give the licensee standing to sue for trespass or nuisance. however, in nz today, it is suggested that if a licensee is in de facto possession, the licensee should have standing to sue in trespass or nuisance - plaintiffs should be able to demonstrate actual occupation and physical control of the land (Evans v Gardner)

Question 36

will a licence support a caveat

Answer 36

bare licenses and contractual licenses, without more, should not be capable of supporting a caveat - no interest in the land.

however, where the proprietary aspect of the licence is enhanced through the support of estoppel, the position remains uncertain