The P Word

The P Word

Property lawyers have become increasingly used to courts blurring the lines between proprietary and personal rights. The turn of the millennium seemed to be a particularly precarious time for the property right and all the things that made it ‘special’, with the decisions in both Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 and Manchester Airport v Dutton [2000] QB 133 causing, quite rightly, much academic concern and consternation.

Unifying theme

 The theme that seems to unify Bruton, Dutton and Manchester Ship Canal is the desire to ‘do the right thing’ to achieve justice between the parties, even if that ‘right thing’ is not right on a principled basis.

The decision in Bruton was supposed to enable Mr Bruton to enforce statutory repairing obligations that were only available to lessees. That caused the House of Lords, led by Lord Hoffmann in its decision, to conclude that Mr Bruton enjoyed a non-proprietary lease: it was a lease as between the landlord and tenant, allowing the enforcement of the repair obligations, but was unenforceable as a lease against third parties. However, that analysis completely ignored the fact that, as Mr Bruton’s landlord was itself only a licensee, it did not have the power to undertake the structural repairs sought by Mr Bruton through the enforcement of the statutory repair obligations.

Therefore, not only did Mr Bruton not end up in any better situation that when he started, but the law of property was left lumbered with the notion of a non-proprietary lease.

Similar issues arose with Dutton. In that case, Manchester Airport, which enjoyed only a licence to enter the land and lop and fell trees, sought possession of the land as protestors had set up camp and were obstructing that access and activity. Possession was granted.

Enabling a licensee to seek possession of land sits uncomfortably with the notion that a licence grants only the right of occupation. Possession, as understood in property law, is a proprietary right. Again, the desire was to do the right thing as between the parties; the party entitled to seek possession of the land (the National Trust) was not seeking possession, and had little appetite to do so.

 Manchester Ship Canal

The Manchester Ship Canal Co Ltd (‘MSCC’) granted Vauxhall Motors Ltd a licence for an annual sum of £50. In short, when Vauxhall failed to pay that sum, MSCC sought to forfeit the licence. The Supreme Court, with Lord Briggs giving the lead judgment, held that equitable relief from forfeiture is not limited to cases where there are proprietary rights at stake, and that it may extend to non-proprietary possessory rights.

The decision to allow relief from forfeiture feels very Bruton and ­Dutton-esque, as the forfeiture of the right seemed disproportionate to the failure to pay a mere £50 (the right was of great utility, and was valued to be worth around £300,000 per annum). The Court, in granting relief from forfeiture, did what it perhaps perceived to be the ‘right thing’, even if that thing was not the most principled of outcomes.

 Manchester Ship Canal – the principled objection

In the course of giving judgment, Lord Briggs makes several statements that will not sit easily with property lawyers.

In particular, his Lordship said

The Licence granted in the present case was a very unusual one, both because it granted an element of virtually exclusive possession, coupled with a high degree of control over the locus in quo, and because it was granted in perpetuity. (paragraph 46)

The Licence granted rights over MSCC’s land very similar to, and indeed more extensive than, rights in the nature of an easement. It is common ground that an easement creates an interest in land, so that its forfeiture may be relieved against. There is no principled reasons why the perpetual rights granted by the Licence should not do so. (paragraph 48)

Furthermore, his Lordship adopted the reasoning of Lewison LJ in the Court of Appeal and held that the Licence granted the possessory rights required for forfeiture (paragraphs 54 to 56).

The core objection to the decision is best summarised by the editor of the Conveyancer and Property Lawyer, Professor Martin Dixon, who says

Possession, properly regarded, is not merely a description of a state of affairs but a term of art implying proprietary status. Thus non-proprietary rights which are “possessory” is a stretch for me.

Licences do not confer possessory rights, as to do so would elevate a licence to the status of a property right. Licences are personal rights only, and confer only rights to occupy the land. All the time the term ‘possession’ is used by property lawyers to imply the proprietary status of a right, licences cannot be described as giving rise to possessory rights, nor can their forfeiture, or any equitable relief for that forfeiture, be justified on the basis of possessory rights.

Similarly, a licence cannot grant rights that are more extensive than an easement, as Lord Briggs suggested at paragraph 48. The licence is inherently fragile when compared to an easement, as it does not enjoy the stability and endurability of a property right. Unlike an easement, the licence can be revoked (either at will or according to the terms of the contract that created it) and cannot be enforced against third parties.

The only way in which a right conferred by a licence may be more ‘extensive’ than an easement is if the licence permits use of the land that is not in the nature of an easement. However, the fragility of that right as compared to the proprietary right of an easement remains.

Conclusions

 It may be that forfeiture of licences, and equitable relief for that forfeiture may be a desirable mechanism to incorporate into English law, in some circumstances. However, it is a stretch to see how such forfeiture can be justified on the basis of possessory rights.

As in Bruton and Dutton, the Supreme Court has again blurred the lines between property and contract, and the nature of the rights generated by each. The erosion of the barrier between the two species of right will become problematic as more and more instances of the erosion occur, and precedent and habit develop. The primacy of the property right is at risk and, if the Bruton, Dutton and Manchester Ship Canal trend continues, there could soon be very little that makes a property right special.