Under a licence granted by the defendant in 1962, the claimant, a substantial manufacturing plant, was entitled to discharge surface water and trade effluent into the defendant’s canal through a drainage system constructed by the claimant on the defendant’s land. The licence, which was granted in perpetuity and for the annual payment of £50, contained a provision entitling the defendant to terminate the licence by notice if the annual payment remained in arrear after a warning notice had been given. In 2013 the claimant failed to pay the sum due leading the defendant, having sent a reminder which elicited no response, to terminate the licence. The judge granted the claimant’s application for relief from forfeiture, on the basis that, assuming the right of passage of water through the defendant’s land did not amount to a possessory right, it came about as close to a possessory right as it was possible to imagine. The defendant appealed, arguing that the judge did not have jurisdiction to grant relief as the equitable jurisdiction to relieve against forfeiture only applied to contracts that conferred proprietary or possessory rights, neither of which the licence did.
On the appeal—
Held, appeal dismissed. The court had jurisdiction to grant relief against forfeiture in respect of a licence which granted the claimant the right to discharge surface water from its plant into the defendant’s canal. The licence gave the claimant the responsibility for the physical construction of the infrastructure and the sole responsibility for its maintenance and repair and did not reserve to the defendant any rights to use the infrastructure or to carry out works to it. Those rights over the physical property, coupled with its physical characteristics and the clear intention that the claimant would be the only entity able to use and maintain it, amounted to a sufficient degree of physical custody and control of the infrastructure, having regard to the nature of the property and the manner in which property of that character was commonly enjoyed. The claimant plainly intended to exercise those rights on its own behalf and for its own benefit. The combination of those elements meant that the rights granted by the licence were possessory in nature, the right of termination was intended to secure the payment of money or the performance of other obligations and therefore the judge had jurisdiction to grant relief against forfeiture and was not wrong in exercising his discretion to grant relief (paras 55, 58, 68, 70, 71, 76, 91, 92, 93).
Katharine Holland QC and Galina Ward (instructed by Hill Dickinson llp) for the defendant.
William Norris QC, Simon Edwards and Daniel Stedman Jones (instructed by Duane Morris llp) for claimant.