Licenses

Question 1

Define a license

Answer 1

A licence is a permission give by the licensor to the licensee to allow the latter to enter the land of the former which, without such permission, would otherwise amount to a trespass.

• it may extend beyond permitting mere entry and give the licensee occupational rights over the land in question.
• Gives the licensee a personal (not proprietary) right (Ashburn)

Question 2

How is a license distinguished from a lease (2)

Answer 2

• Lease gives a proprietary right, license gives a personal right
• If a license includes occupational rights then these rights will fall short of EP

Question 3

How is a license distingsuihed from an easement (3)

Answer 3

N.b. licenses can appear v, similar to easements but they are distinguishable:

• Easement must have 4 charectistrics of Re Ellenborough
• Easements are proprietary, licenses are personal
• Remember that license can convert into easements via operation of s.62 LPA providing the rights of the license are capable of being the subject matter of an easement

Question 4

Bare License (3)

Answer 4

• Expressly or impliedly created
• revocable by the licensor
• does not bind a TP

Question 5

License coupled with an interest (i.e. a profit a prendre) (3)

Answer 5

License coupled with an interest (i.e. a profit a prendre):

• Given to enable some other proprietary interest to be enjoyed
• may be irrevocable as long as the proprietary interest remains
• may bind a TP whilst the interest remains, since the license shadows a binding proprietary interest

Question 6

Contractual licenses (3)

Answer 6

Contractual licenses:

• licenses that arise under the terms of a contract – given for consideration
• Revocation may lead to breach of contract and the intervention of equity to enforce the licence for the benefit of the licensee. (Winter Garden Theatre)
• Modern orthodoxy suggest such license cannot bind third parties unless protected by an estoppel or constructive trust. Ashburn Anstalt v Arnold [1989]

Question 7

Tanner v Tanner [1975] 1 WLR 1346 CA

Answer 7

Tanner v Tanner [1975] 1 WLR 1346

• Facts:
  
  • D and P had children and agreed that a house should be purchased for D and thechildren.
  • P paid for the house and D left her rent-controlled flat to live there.
  • P later asked D to leave and sued for possession
• Issue: Could the defendant be forced to leave?
• Decision: No
• Reasoning:
  
  • Her giving up of rent-controlled accommodation constituted consideration for an implied contractual licence granted to her, terminable once her children finished school
  • Following the contrary first instance decision, her leaving of the house negated the need for an injunction – she was awarded £2000 in damages instead

Opinion: the implied grant of a licence ‘until circumstances change’ could be doubted

Question 8

Chandler v Kerley [1978] 1 WLR 693 CA

Answer 8

Chandler v Kerley [1978] 1 WLR 693 CA

• Facts:
  
  • X and D bought a house, and after getting divorced sold it to P, for substantially less than the asking price, with whom D was in a relationship. D and her children continued living there. P later demanded that D leave and sued for possession.
• Held:
  
  • CA found that there was a contractual license, terminable upon reasonable notice, which gave her sufficient time to re-house herself and her children. In this case, 12 months was appropriate.
• Judgement:
  
  • Lord Scarman: It is unlikely that P intended to house another man’s wife and children indefinitely, but was likely that he intended to allow her to live their while they were in a relationship. Therefore it was the implied intentions of the parties that P could reside there until a notice was given to her to leave, and this notice had to be reasonable

Question 9

Winter Garden Theatre v Millenium Productions[1948] AC 173 HL

Answer 9

• Facts:
  
  • The company Winter Garden Theatre Ltd promised Millennium Productions Ltd that it could use the theatre for 6 months, with an option to renew for another 6 months, and after that it could continue for a flat weekly fee of £300.
  • Millennium would have to give a month’s notice if it wished to terminate, but Winter Garden’s obligations weren’t stated.
  • The licence continued for over a year.
  • Winter Garden decided to revoke the licence, giving a month’s notice.
  • Millennium argued this was breach of contract and that Winter Garden could only revoke if they (Millennium) were in breach of contract, or if they gave reasonable notice.
• Issue: Was the revocation notice effective?
• Decision: Yes
• Reasoning: A licence may not grant rights which exceed those capable of being granted by way of a lease. ‘Perpetual’ licences may be revoked on reasonable notice: 1 month’s notice was reasonable
• Analysis:
  
  • The HL recognised that an injunction could be awarded to prevent a premature termination of a contractual licence in circumstances where it was intended to be irrevocable until a purpose had been fulfilled or a period time completed.
  • License for consideration can be sub-divided:
    
    • Consideration given once for all ( i.e. capital payment)
    • Consideration give as periodic payment
    • Consideration given once for a period ( i.e. ticket to a match)

Question 10

Hounslow LBC v Twickenham Garden Developments [1971] Ch 233

Answer 10

• Facts:
  
  • Hounslow LBC had entered into a building contract with Twickenham Garden Development under which the Ds were to carry out certain construction works on land owned by the Council.
  • As part of the contract the Council granted the Ds a licence to enter the site to carry out the work.
  • There was a clause in the contract that if the Council served notice that Ds work wasn’t progressing adequately, and this was not served unreasonably, then the Council would be entitled to determine the contract after 14 days of the notice being served.
  • Council became unhappy as the building works were taking a long time and they purported to terminate the agreement, serving the notice.
  • However after 14 days Ds refused to vacate the premises and refused to accept that the Council were entitled to do this. The Council sued for an injunction.
• Issue: regardless of who was right on the main issue of whether the Council were entitled to do this) was whether the Council could obtain an injunction to force the Ds to leave the site
• Decision: No
• Reasoning:
  
  • The question will be one of construction of the contract, and whether upon true construction of the contract it was intended to be irrevocable.
  • Megarry J refused to grant the injunction on basis that the Ds’ licence to remain on Council’s land was a contractual one, due to last for a specific period. Unless this contract had been validly determined (terminated) by the Council, the court would not grant an injunction as this would be to aid the wrongful repudiation of contract as, in this case, the Council had failed to show that Ds had breached contract and therefore was not entitled to determine (terminate) the contract. Thus the licence would not be ended by injunction.​
• Quotes:
  
  • The threefold classification of licences is well known. There are licences coupled with an interest, contractual licences, and bare licences. A licence coupled with an interest: see, e.g., Wood v. Manley (1839) 11 Ad. & El. 34 . is irrevocable. The other two forms of licence, however, have been held to be revocable.
  • There is, however, an alternative route to irrevocability, namely, by means of a contract. Let it be assumed that there is no “interest” which can be coupled with a licence, but merely a contract. If there be a licence with an agreement not to revoke the licence, that, if given for value, is an enforceable right. The grant of such a licence “must imply a negative undertaking by the licensor not to revoke it.”

Question 11

Verrall v Great Yarmouth BC [1981] QB 202 CA

Answer 11

Verrall v Great Yarmouth BC [1981] QB 202 CA

• Facts:
  
  • The National Front had contract to hire a hall for its annual conference. When the labour council sought to revoke the license, an order to specific performance was granted.
• Reasoning: Damages were deemed inadequate as the NF had not been able to find an alternative venue. With the intervention of equity, the contractual license was enforced and this could not be revoked at will
• Analysis:
  
  • This does not mean that all contractual license will now be prevented from being revoked by the licensor when he wishes. Equitable remedies are subject to discretion and will only be provided in circumstances where damages for breach of contract appear inadequate
  • The question will be one of construction of the contract, and whether upon true construction of the contract it was intended to be irrevocable (Hounslow LBC v Twickenham).

Question 12

King v David Allen [1916] 2 AC 54 HL

Answer 12

King v David Allen [1916] 2 AC 54 HL

• Facts
  
  • A tenant of a lease over a cinema gave the claimant a license to advertise within the grounds in exchange for a fee. The tenant brought their lease to an end, and a new lease was granted to a different tenant. The claimant sought to continue advertising within the grounds, but the new tenant refused to honour the agreement.
• Issue:
  
  • The issue in this case was whether the claimant’s contractual license to advertise could be enforced against the new tenant, and if not, whether the original tenant would be liable in damages for breach of contract.
• Held:
  
  • The House of Lords held that the license could not be enforced against the new tenant for two reasons, but the advertising company could sue the old tenant for damages for breach.
    
    • Firstly, the House of Lords held that the termination of the lease by either party would also terminate the possession of any license granted by the tenant to another. As such, there was no existing license which could be enforced against the new tenant. If the license is contractual (as it was in the present case), the tenant will expose himself to an action for breach of contract if he is the one to end the lease. As such, the original tenant was liable to the claimant in damages for breach of contract.
    • Secondly, the House of Lords reiterated the principle that contractual licenses are personal, non-proprietary rights which do not inure to the land. As such, they do not bind successors-in-title to the land: they only bind the parties that entered into them. As the new tenant was not a party to the agreement, they could not have been bound by the license even if it had still existed.

Question 13

Clore v Theatrical Properties [1938] 3 All ER 483 CA

Answer 13

Clore v Theatrical Properties [1938] 3 All ER 483 CA

• The assignee of a licence of a theatre café, could not enforce terms against a new landlord who did not buy subject to the assignee’s rights. The court held that a licence creates no interest in land, so its terms are not binding on successors in title.
• Followed the approach as set out by the HL in King v David Allen

Question 14

Errington v Errington [1952] 1 KB 290 CA

Answer 14

Errington v Errington [1952] 1 KB 290 CA

• Facts:
  
  • Mr Errington bought a house in Milvain Avenue, Newcastle, as a home for his son and daughter-in-law. Mr Errington paid £250 and the remaining £500 of the purchase price was financed by a mortgage loan.
  • The mortgage instalments were paid by the son (p. 233) and daughter-inlaw, who occupied the land. Mr Errington (A) promised the son (B1) and daughter-in-law (B2) that they could remain in occupation as long as they paid the mortgage instalments. He also promised them that, when all of the instalments were paid, the land would be theirs. A died and B1 left the home, moving in with A’s widow, his mother. B2 remained in occupation. A’s widow sought possession of the house from B2. The county court judge dismissed that claim for possession. A’s widow unsuccessfully appealed to the Court of Appeal.
• Analysis:
  
  • Denning LJ deemed that the availability of equitable remedies gave rise to an ‘equity’ in favour of the licensee. This equity would then be enforceable against a third party according to the doctrine of notice, thus conferring proprietary status upon a contractual licence.
  • This meant that equitable rights bound everyone except the bona fide purchaser of a legal estate for value without notice of the equitable interest, seeing as the interest acquired under the property was equitable, Mrs Errington would be bound by it unless she was a bona fide purchaser of a legal estate for value (which she wasn’t as she inherited the house) without interest of the equitable interest (which she had as she knew her daughter in law had an equitable interest in the house). A comparison was drawn with restrictive covenants.
  • His Lordship’s reasoning is also based on the fact that a court will often protect B’s contractual licence by ordering A not to revoke that licence in breach of his contract with B. Lord Denning assumes that B therefore has a right to use A’s land for the duration of his contract, and so B has a right not only against A, but also in relation to A’s land.
• However Macfarlane identifies a key flaw in Denning’s argument:
  
  • Denning misunderstands the true effect of the availability of SP on the proprietary status of a right. The mere fact that specific performance is available against A does not prove that B’s right must be proprietary.
    
    • The question of whether to confer proprietary status on a right involves considerations additional to those addressed when deciding that specific performance is available against A. The needs of B must be balanced not just against those of A but also against those of actual and potential third parties. Most obviously, B must show why he should be protected as against a party who, unlike A, has made no contractual promise to him. Hence, the mere fact that B can gain specific performance against A does not demonstrate that B’s right has the proprietary status it needs to be protected from interference by C

Question 15

Give 3 alternative explanations to Errington

Answer 15

1. Estate Contract; had the son and daughter in law registered the estate contract as a class c(iv) land charge against Mr Errington on Land Charges Register, then it would have bound any purchaser of the legal estate, except one for money or money’s worth (which Mrs Errington wasn’t as she inherited it)
2. Constructive Trust
3. Proprietary Estoppel

Question 16

What are the 3 key questions to ask when regarding teh use of a constructive trust to bind a TP sucessor-in-title, to a perviously granted lease?

Answer 16

The key questions (use the cases to try to decide the answers) are:

(i) is this whole idea good law?
(ii) when is it unconscionable for the purchaser not to honour the licence?
(iii) if a purchaser is bound by such a constructive trust, is this trust itself the right in rem that it sounds like - and so capable of binding a further purchaser simply on the strength of the licencee’s actual and apparent occupation - or will a further purchaser be bound only if new unconscionability can be found against him or her in turn?

Question 17

Ashburn Anstalt v Arnold [1989] Ch 1, 13C-22D CA

Answer 17

Ashburn Anstalt v Arnold [1989] Ch 1, 13C-22D

• Facts:
  
  • D occupied the property under an arrangement under which they paid no rent. The landlord sought possession, saying that the agreements were licences not tenancies because of the absence of rent and licenses were not interests in property. D argued that (1) it was lease, and (2) even if it was license it would bind.
• Held:
  
  • CofA held it was a lease ( bad law) but that if was a contractual license it would not bind (still good law)
  • Contractual license cannot bind successors in title, except in very special circumstances, where the court is prepared to find a constructive trust
• Analysis
  
  • Reaffirmed traditional view that contractual licences weren’t proprietary interests in land and so wouldn’t bind anyone who wasn’t party to the contract. Denning LJ’s decision in Errington held to be per incuriam (through lack of care)
  • Court of Appeal held that a contractual licence was (1) not capable of binding subsequent buyers of the freehold and (2) did not create an interest in land.
  • However, the court did hold that a contractual licence could bind a subsequent buyer of the freehold if the buyer acquired the property as a constructive trustee. The court stated that it would impose a constructive trust in circumstances where a buyer had so conducted himself that it would be inequitable to allow him to deny that a claimant licensee had an interest in the property.
  • In addition the court stated that the fact that a property was expressed to be conveyed “subject to a contractual licence” was not necessarily sufficient to justify imposing a constructive trust on a buyer.
  • A constructive trust will be created where the conscience of a purchaser is affected, and will require more than mere disclosure of a licence. Paying a lesser purchase price may be a factor capable of affecting a purchaser’s conscience.

Question 18

Summarise the 3 key constructive trust points from Ashburn

Answer 18

1. Contractual licence could bind a subsequent buyer of the freehold if the buyer acquired the property as a constructive trustee.
2. Constructive trust imposed where a buyer had so conducted himself so that it would be inequitable to allow him to deny that a claimant licensee had an interest in the property.
3. A constructive trust will be created where the conscience of a purchaser is affected, and will require more than mere disclosure of a licence. Paying a lesser purchase price may be a factor capable of affecting a purchaser’s conscience, however the fact that a property was expressed to be conveyed “subject to a contractual licence” was not necessarily sufficient