A recent Supreme Court decision has looked at whether the court can grant relief from forfeiture of a licence, which has potentially wide implications for termination of mooring licences.

In Manchester Ship Canal Co Ltd v Vauxhall Motors Ltd (formerly General Motors UK Ltd) [2019] UKSC 46, the canal owner had granted Vauxhall a perpetual licence to discharge water into the canal from its nearby car plant. The licence also granted the right to construct, use and maintain on canal land a large concrete structure to manage the flow of water into the canal.

One of the obligations in the licence was to pay a fixed amount of just £50 per year. If the payments were not made the licence could be terminated. Through a simple administrative error, Vauxhall failed to pay the £50 annual fee and the canal owners terminated the licence.


What was the issue for the court to decide?

It is well established that when a landlord under a lease forfeits a lease for non-payment of rent, the tenant can apply to the court for relief from forfeiture to reinstate the lease. But, there have been no previous cases dealing with pure licences.

The ability to terminate a licence if the licence holder fails to comply has to be written onto a licence as an expression provision to be able to terminate or forfeit. However, termination provisions are routinely included in licences as security for the landowner.

The Supreme Court found that the courts do have the jurisdiction to grant relief on termination of licences, subject to two conditions:

  1. the licence grants some form of proprietary or possessory rights over land; and
  2. the provision that gave rise to the right to terminate the licence must have been included as security for the attainment of a particular object, such as payment of the licence fee or compliance with covenants.


What does this mean for mooring licences (or any other type of licence)?

If a mooring licence has provision for termination in the event of non-payment or other breach, the licence holder can now apply to the County Court for relief if the licence is terminated on the grounds of breach. Previously it was thought that the termination of a licence would be final in those circumstances.

Although this will not be such an issue for licences issued for a short fixed period, for anyone wanting to terminate longer-term licences there is now more likely to be a challenge from the licence holder. The court will have wide discretion to reinstate a licence on such terms as it thinks fit.