Should the judgment of Laws LJ in Manchester Airport plc v Dutton [2000]
1 QB 133 be adopted as the law in Victoria?
Abstract
In the context of property and contract law, this article attempts to refine the legal
basis and scope of enforceability of a contractual licence. It asks whether the
novel UK case of Manchester Airport plc v Dutton [2000] 1 QB 133 should be
adopted as the law in the Australian state of Victoria; it argues in the negative.
Traditionally, a contractual right was enforceable only against parties to the
contract under which that right arose. In contrast, a property right was
traditionally enforceable against the entire world. Thus, the distinction between a
contractual right and property right lay in the extent to which each could be
enforced against other parties. Where, however, the subject of a contractual right
has involved real property, the distinction between contract and property has
become blurred. In particular courts have had to decide whether a contractual
licence, which provides a licensee with permission to enter land for a specific
purpose, can give rise to rights against third parties—rights more simply described
as ‘property rights’.
Dutton allowed a contractual licence to transcend its traditional status of a mere
contractual right and take on the more expansive status of a property right, so as to
be effective against third parties in general. This article, however, contends that
Dutton should not be adopted in Victoria on two key grounds: (a) the Victorian
common law is potentially capable of enforcing a contractual licence against
specific third parties even without adopting the radical reasoning in Dutton and (b)
the reasoning in Dutton itself is, with respect, deficient and susceptible to being
overruled as it leaves unanswered a number of crucial questions.
Key Words: Contract vs. property; Rights of contractual licensee against third
parties
1
Dutton1 vis-à-vis Australian law
Dutton held that a contractual licensee (‘licensee’), whether or not she/he is in factual
possession of the land the subject of her/his licence, will have access to a right of possession
against trespassers if such a right is necessary to give effect to her/his contractual rights of
occupation. 2 In contrast, Australian case law only provides a licensee with a right of
possession against trespassers if she/he is already in possession. 3 That is, if she/he finds
trespassers already on the land before she/he is able to take possession, she/he will have no
access to a right of possession. I argue that Dutton should not be adopted as the law in
Australia.
Merits of the result in Dutton
Momentarily putting to one side the Court’s underlying reasoning in Dutton, that case
produced a desirable result—the fortification of a licensee’s contractual right with an ad hoc
possessory right—for a number of reasons. Firstly, a licensee’s contractual rights are given
real force rather than left nugatory: just as in Dutton, if X has a licence to lop trees on Y’s
land, but Y fails to remove trespasser Z from the land, an ad hoc right of possession against Z
allows X to enjoy her/his contractual right to lop the trees.
Secondly and more broadly, contractual rights and property rights are both essential to an
efficient economy: the former create trust between parties in business dealings by ensuring
their expectations are met, while the latter ensure that parties are able to retain the spoils of
their transactions without the trouble, for example, of theft.4 Hence X’s ad hoc possessory
right complements her/his contractual right, promoting economic efficiency: X will not
hesitate to pay Y for the right to lop the trees if she/he knows her/his right will be realised.
Without a possessory right to support her/his contractual right, however, an economically
inefficient outcome would arise wherein X is reluctant to transact with Y even though she/he
is willing to pay for the right to lop the trees. Doubtless X can sue Y for breach of contract,
but this too is inefficient: X, unable to sue Z for trespass, must (1) initiate legal proceedings
against Y and (2) wait on an already recalcitrant Y to sue Z for trespass before (3) X can
finally enjoy her/his contractual right to lop the trees. Although X’s contract is economically
1
Manchester Airport plc v Dutton [2000] 1 QB 133.
Ibid 150.
3
Western Australia v Ward (2002) 213 CLR 1, 223; Georgeski v Owners Corporation Strata Plan 49833 (2004)
62 NSWLR 534, 563.
4
Jean Hindriks and Gareth D Myles, Intermediate Public Economics (MIT Press, 1st ed, 2006), 74.
2
2
valuable in that it can be sued upon, its fundamental purpose is not realised. With an ancillary
right of possession, however, X can directly sue Z for trespass and more speedily enjoy
her/his contractual right.
As above, the Australian common law refuses to provide a licensee out of possession, beaten
to the land by trespassers, with an ad hoc possessory right to supplement her/his contractual
right of occupation. This ‘anomaly’ 5 leaves a licensee’s contractual rights seemingly
ineffective simply because she/he is unable to take possession of the land before trespassers
can, and therefore lends support to the adoption of Dutton as the law in Victoria and indeed
Australia. Before rushing to adopt Dutton, however, there is one important question: is the
current common law of Australia capable of giving effect to the contractual rights of a
licensee beaten to the land by trespassers, without adopting Dutton?
Alternatives to adopting Dutton: existing remedies and potential rights in Australia
A licensee not in possession may be able to seek an injunction, grounded in the tort of
interference with contract, to prohibit trespassers from interfering with her/his contractual
rights. 6 As this tort can, however, only be established where the trespassers knew of the
licensee’s contractual rights and intended to interfere with those rights, an injunction may
rarely be available to a licensee:7 although Z may have intended to prevent X from lopping
trees, Z may not have intended to interfere with X’s contractual rights per se.
The Australian common law, within the bounds of its existing principles of contractual
interpretation,8 may already be able to afford a licensee with a possessory right ancillary to
her/his contractual rights of occupation. I propose that it is open to Australian courts to imply
into a licence a right of the licensee to exercise, as agent of the licensor, the licensor’s right of
possession against the specific trespassers already on the land at the time the licence is
granted. An implied right of agency is justified as it is only fair to assume that a licensor
intends that the licensee actually enjoy her/his contractual rights. With the licensee acting as
the licensor’s agent, it would technically be the licensor exercising the right of possession.
That is, the right of possession would still vest in the licensor, but could be enforced by the
5
Gwen Seabourne and Ewan Paton, 'Unchained Remedy: Recovery of Land by Licensees' (1999) Conveyancer
and Property Lawyer 535, 535.
6
Emma Lochery, 'Pushing the Boundaries of Dutton?' (2011) ibid 74, 78.
7
Ibid 81.
8
See BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266.
3
licensee: strictly speaking, the licensee herself/himself would have no property rights. An
implied contractual right of agency, true to principles of contractual interpretation, would
merely give effect to the contract itself rather than recognise new ad hoc rights.
An implied right of agency may appear to simply involve a roundabout application of Dutton,
in that it is a right against third parties. There are, however, key differences between an
implied right and a property right which Dutton confers upon a licensee.
Firstly, as above, a licensee’s right of agency would only bind specific third parties
(trespassers) already on the land: X would be able to sue Z who is already on the land at the
time X’s licence is granted, but X would be unable to sue a new trespasser who appears after
X’s licence is granted. Dutton, on the other hand, confers rights against third parties in
general: X is able to sue not only Z, but also new trespassers. It must be recognised that a
right enforceable against third parties is not necessarily a property right. 9 Indeed, applying
Blackstone’s definition of property—‘despotic dominion which one man claims over the
external things of the world, in total exclusion of the right of any other individual in the
universe’10—a licensee’s implied right of agency would not be a property right because it
binds only specific third parties who are interfering with her/his right of occupation at the
time the licence is granted rather than third parties in general. The licensee’s right of agency
is not a right of exclusive possession in rem: the essence of a property right.11 It is merely in
personam: against identifiable individuals.12
Secondly, as the licensee’s rights are determined as at the time the licence is granted, they are
circumscribed invariably because they bind only the specific individuals already on the land.
Thus, the licensee’s implied right of agency cannot expand to bind future third parties whom,
for example, the licensor herself/himself may have willingly invited upon the land.
Thirdly, the licensee’s implied right of agency is not invoked ad hoc by third parties’
interference with the licensee’s rights of occupation, but comes into existence together with
the licence granted to the licensee. Contrasted with the traditional view that a licensee has (a)
a right of occupation arising from contract and (b) a right of possession arising only from the
9
Yanner v Eaton (1999) 201 CLR 351, 366.
William Blackstone, Blackstone's Commentaries (Oxford, 1766) vol 2, 2.
11
Hunter v Canary Wharf Ltd [1997] AC 655, 703.
12
John Tarrant, 'Obligations as Property' (2011) 34(2) University of New South Wales Law Journal 677, 688.
10
4
fact of possession, 13 an implied right of agency would arise solely from the contractual
licence, whether or not the licensee is in possession.
Prima facie, an implied right of agency is not without flaws: while on the one hand keeping
shut the closed number (numerus clausus)14 of legally recognised property rights, it expands
the sphere of contractual rights by violating the doctrine of privity whereby only those parties
to a contract can be bound by that contract.15 One may note, however, that no new rights
against third parties are created: rather, the licensee’s right of agency merely entitles her/him
to enforce the licensor’s existing rights against third parties.
Another perceived flaw is that an implied right of agency, as defined above, is unable to bind
trespassers who appear on the land after the licence is granted, but before the licensee takes
possession. On the other hand it is arguable that a licensee should give effect to her/his own
licence, to the extent that she/he is able, by taking prompt possession of the land upon grant
of her/his licence. Such a licensee at least has a chance of taking possession, unlike a licensee
who is beaten to the land.
The flaws of Laws LJ’s reasoning in Dutton
Although the result in Dutton was desirable, it manifestly contradicted UK domestic
precedent 16 by providing a licensee not in possession with rights against third parties.
Crucially, the majority reasoning of Laws LJ, on which this result was reached, also appears
to have several deficiencies.
Firstly, Laws LJ’s remark,17 that it is only logical for a licensee out of possession to have the
same rights as a licensee in possession, obliterates the long-standing distinction between a
right of possession and a right of mere occupation.18 Despite the former being an interest in
land and the latter a mere personal permission to enter the land for a specific purpose, 19 Laws
13
Georgeski v Owners Corporation Strata Plan 49833 (2004) 62 NSWLR 534, 562.
See Brendan Edgeworth, 'The Numerus Clausus Principle in Contemporary Australian Property Law' (2006)
32(2) Monash University Law Review 387.
15
William Swadling, 'Opening the Numerus Clausus' (2000) 116 Law Quarterly Review 354, 359.
16
See, for example, Hunter v Canary Wharf Ltd [1997] AC 655.
17
Manchester Airport plc v Dutton [2000] 1 QB 133, 150.
18
Emma Lochery, 'Pushing the Boundaries of Dutton?' (2011) Conveyancer and Property Lawyer 74, 80.
19
Radaich v Smith (1959) 101 CLR 209, 222. More tellingly, see Chadwick LJ’s dissent: Manchester Airport
plc v Dutton [2000] 1 QB 133, 143.
14
5
LJ conflates the two, failing to recognise each right’s distinct source.20 His amalgamation of
possession and occupation implies that a licence can even bind a licensor’s successors in title
if necessary to give effect to a licensee’s rights of mere occupation, which is an absurd
proposition.21
Secondly, Laws LJ did not distinguish degrees of possession. What degree of possession
must the licensee have to be entitled to sue trespassers? Using the example of a single
cinemagoer who holds a ticket (licence) to watch a film, but is only one of many such
licensees, Dobbs notes it is unreasonable for the single cinemagoer to be afforded rights in
personam against a trespasser. The cinemagoer may have rights against a trespasser, however,
where she/he has hired the entire cinema for herself/himself.22
Thirdly, it is unclear from Laws LJ’s judgment what specific degree, if any, of interference
with the licensee’s contractual right is sufficient to invoke an ad hoc possessory right.23 Is it
sufficient for the trespasser merely to interfere with the licensee’s right of occupation, or
must she/he render the licensee’s right useless? Laws LJ leaves this question unanswered and
thus leaves uncertain the scope of a licensee’s ad hoc possessory right, in terms of how many
trespassers it could cover.24
Fourthly, Laws LJ’s reasoning renders the tort of interference with contract partially
irrelevant. Given that on Laws LJ’s reasoning a licensee may sue any third party without
rights of possession equal or superior to her/his own, why should a licensee sue trespassers
for interference with contract when she/he can simply sue them in trespass? That is, Laws
LJ’s reasoning implies that a third party need not satisfy a fault element in interfering with
the licensee’s contractual rights of occupation: presumably even an unintentional trespasser
could be vulnerable to a licensee’s action in trespass.25
Lastly, where a licensor fails to remove trespassers from her/his land, a licensee can always
compel the licensor to give effect to her/his obligations by suing for breach of contract
20
William Swadling, 'Opening the Numerus Clausus' (2000) 116 Law Quarterly Review 354, 358.
Ibid 359.
22
Andrew Dobbs, 'Possession and Occupation—Two Sides of the Same Coin?' (1999) 10(2) King's College Law
Journal 226, 226.
23
Emma Lochery, 'Pushing the Boundaries of Dutton?' (2011) Conveyancer and Property Lawyer 74, 78.
24
Ibid 81.
25
Ibid.
21
6
(despite, as above, this process being inefficient). One cannot help but detect a hint of
‘discretionary remedialism’26 in the judgment of Laws LJ, who seems to have decoupled the
remedy of an order for possession from its prerequisite liability: a trespasser’s intentional
interference with the landowner-licensor’s possession rather than the licensee’s occupation.27
With respect, it was not open to Laws LJ to affirm an order for possession for a mere licensee.
Laws LJ’s reasoning, being preoccupied with providing a licensee with a possessory right
against trespassers, has opened up a number of ambiguities in the law concerning a licensee’s
rights against third parties.
Conclusion
Courts perhaps find themselves compelled to give effect to a licensee’s rights of occupation
by enforcing them against third parties. However, they must always engage sound legal
reasoning. Dutton, having ignored several crucial issues concerning the scope of a licensee’s
rights against third parties, is unrefined and susceptible to being overruled in future. The
majority judgment of Laws LJ should not be adopted as the law in Australia, let alone
Victoria.
26
27
Peter Birks, 'Rights, Wrongs, and Remedies' (2000) 20(1) Oxford Journal of Legal Studies 1, 1.
William Swadling, 'Opening the Numerus Clausus' (2000) 116 Law Quarterly Review 354, 359.
7
References
Birks, Peter, ‘Rights, Wrongs, and Remedies' (2000) 20(1) Oxford Journal of Legal Studies 1.
Blackstone, William, Blackstone's Commentaries (Oxford, 1766) vol 2.
Dobbs, Andrew, ‘Possession and Occupation—Two Sides of the Same Coin?' (1999) 10(2)
King's College Law Journal 226.
Edgeworth, Brendan, ‘The Numerus Clausus Principle in Contemporary Australian Property
Law' (2006) 32(2) Monash University Law Review 387.
Hindriks, Jean and Gareth D Myles, Intermediate Public Economics (MIT Press, 1st ed,
2006).
Lochery, Emma, ‘Pushing the Boundaries of Dutton?' (2011) Conveyancer and Property
Lawyer 74.
Seabourne, Gwen and Ewan Paton, ‘Unchained Remedy: Recovery of Land by Licensees'
(1999) Conveyancer and Property Lawyer 535.
Swadling, William, ‘Opening the Numerus Clausus' (2000) 116 Law Quarterly Review 354.
Tarrant, John, ‘Obligations as Property' (2011) 34(2) University of New South Wales Law
Journal 677.
Cases
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Georgeski v Owners Corporation Strata Plan 49833 (2004) 62 NSWLR 534
Hunter v Canary Wharf Ltd [1997] AC 655
Manchester Airport plc v Dutton [2000] 1 QB 133
Radaich v Smith (1959) 101 CLR 209
Western Australia v Ward (2002) 213 CLR 1
Yanner v Eaton (1999) 201 CLR 351
8