Court Grants Relief from Forfeiture of a Licence

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The perennial impact of inflation means that fees payable under antique licence agreements may dwindle to the point where they appear insignificant. However, as a case concerning industrial and surface water discharges into the Manchester Ship Canal showed, it remains vitally important to pay them on the nail.

The Manchester Ship Canal Company Limited had, in 1962, granted a perpetual licence to a vehicle manufacturer to discharge surface water and trade effluent into the canal from its plant through a purpose-built drainage system. The licence required the manufacturer to pay a fee of £50 per annum. It also provided that, if such payments remained in arrears after the issue of a warning notice, the company was entitled to terminate the licence.

The manufacturer duly paid £50 annually until, for some reason, it ceased to do so in 2013. The company sent a warning notice and, after that elicited no payment, proceeded to terminate the licence. The manufacturer’s belated offer to pay the outstanding sum was not accepted. The value of the discharge rights conferred by the licence had, over the years, swelled to between £300,000 and £440,000 per annum.

After the manufacturer launched proceedings, however, a judge granted it relief against forfeiture of the licence. In dismissing the company’s challenge to that ruling, the High Court rejected arguments that the judge lacked jurisdiction to assist the manufacturer and that the application for relief had been made too late. In exercising his discretion, the judge had been entitled to take into account the substantial windfall that would accrue to the company if relief were to be refused. The Court’s decision enabled the manufacturer to continue to exercise the rights granted by the licence at the contractual rate of £50 per annum.

The Manchester Ship Canal Company Limited v Vauxhall Motors Limited

 

Felix Clarke