Licences Lecture 2
Simon Spurgeon
Track/Slide 1
This is the second in a two-part series of lectures on licences. In the first lecture we looked at the
difference between leases and licences. However, once you’ve established that you have a licence as
opposed to a lease, it’s necessary to find out what type of licence it is as, depending on what type of
licence it is, it will be enforceable against the licensor and in certain circumstances successors in title
to the licensor. When considering types of licences, there are three main issues that we need to look
at: what different types of licences are there, can they be enforced against the original licensor and
can they be enforced against third parties such as successors to the original licensor? In terms of the
different types of licences, there are four main types of licences which we will examine in more
detail: bare licence, a licence coupled with an interest, a contractual licence and a licence by
estoppel.
Track/Slide 2
The lowest form of licence is what is referred to as a bare licence. This type of licence is granted
gratuitously. In other words, there is no consideration. In can either be expressly granted, for
example if you invite a friend to your house, or it can arise through implication. As we have already
seen in the first lecture, the postman delivering letters to your house has an implied bare licence to
go through your garden gate and approach the front door of your house to leave the letters.
Similarly a shop by opening its doors is granting you an implied licence to enter the shop to look at
the goods on sale. It is important to remember that this implication can be rebutted. So for example
if you have a sign on your gate saying “no free newspapers” then there is no implied licence for a
delivery person to come and deliver free newspapers to you. If part of a shop is roped off because
they are altering a display then your implied licence inviting you into the shop to look at the goods
on display will not apply to the area which has been cordoned off.
Track/Slide 3
As the quote from Lord Diplock in Robson v Hallett puts it “When a householder lives in a dwelling
house to which there is a garden in front and does not lock the gate, it gives an implied licence to
any member of the public who has lawful reason for doing so to proceed from the gate to the front
door and to inquire whether he may be admitted”. However, it must be remembered that whilst a
bare licence may arise fairly easily through implication, in the hierarchy of licences it is the lowest
form of licence which offers the least amount of certainty and protection to the licensee.
Track/Slide 4
A bare licence can be revoked by the licensor at any time. For example, going back to the previous
example about you inviting a friend to your house, if you argue with your friend and ask them to
leave, you will be revoking the licence you have given them to come into your house. If you do this
however, you must allow them a reasonable time to leave the property, what constitutes a
reasonable time being a question of fact depending on the circumstances of the case. In Robson v
Hallet police officers visited a property and knocked at the door. Initially when they were on the
property they were licensees and within their rights to be there. However, in the absence of a search
warrant or some other form of authority permitting them to remain on the property, their licence
could be revoked by the occupier asking them to leave. In so doing then they must be given a
reasonable amount of time to leave the property. The manner in which the licence is revoked must
also be given some consideration, as was seen from the case of Gilham v Breidenbach. The
expression to f*** off has been held to be a term of abuse rather than a revocation of a licence.
Track/Slide 5
In respect of enforcing bare licences against successors in title then the general principle is that as
the licence is a personal interest between a licensor and a licensee, it will not be binding on any
successors in title. Generally speaking, as the licence can be revoked at any time by the original
licensor then it stands to reason that it can also be revoked at will by successors in title to the
original licensor.
Track/Slide 6
A licence coupled with an interest is not a standalone licence like a bare licence but is linked to some
other interest that can only be exercised with the benefit of the licence. For example as the
quotation from Hounslow London Borough Council v Twickenham Garden Developments states, “a
licence to go on land to sever and remove trees are accepted examples of a licence coupled with an
interest”.
Track/Slide 7
A licence coupled with an interest can’t be revoked by the original licensor as long as the underlying
interest continues. Using the tree example from the previous quotation, the right to take wood from
land is what is called a profit which is similar to an easement. So as long as that underlying right
exists, the licence must also exist. Generally speaking profits or easements are interests in land and
are therefore more difficult to terminate than licences. Therefore a licence coupled with an interest
gives the licensee more protection than a purely bare licence. In terms of enforcing a licence coupled
with an interest against a successor in title, then a licence will bind the successor as long as they are
bound by the linked underlying interest. In other words it’s the same position as if we were talking
about an easement or a profit. So for example in registered land a legal easement may be an
overriding interest under schedule 1 or schedule 3 of the Land Registration Act 2002 or since the
introduction of the Land Registration Act 2002 it should be entered on the Register in order for it to
acquire legal status.
An equitable easement or profit should be protected by entering a notice on the Register. Therefore
in registered land if the underlying easement or profit is not protected or is not an overriding
interest then a successor in title will not be bound by it and therefore will not also be bound by the
accompanying licence. In unregistered land legal easements and profits fall under the general
principle that legal rights bind the world. An equitable easement or profit is a D3 land charge and
should be registered against the name of the estate owner at the time the profit or easement arose.
Track/Slide 8
The next type of licence to look at is a contractual licence. The difference between a contractual
licence and a bare licence is that for there to be a contractual licence there must have been some
consideration as it is granted by contract whereas, as we have already seen, a bare licence has no
consideration. Contractual licences can either be short term or long term. In the previous lecture on
licences we have already seen examples of short term contractual licences. Entry to the cinema,
entry to a football match or entry to a car park are all examples of a short term contractual licence.
Long term licences would cover such rights as occupation of a house, a flat or a shop. As with bare
licences, contractual licences may either be express or implied. When you buy a ticket for the
cinema or to watch a football match then you will be entering into an express contractual licence
and it is not uncommon to find in very small print the terms of that licence on the back of the ticket.
However it is also possible for there to be an implied contractual licence and this was the case in
Tanner v Tanner where a woman gave up a protected tenancy in order to move into the house
provided by her partner and to care for their children. When the relationship broke down the court
held that they could imply a contractual licence and that the woman could remain in occupation of
the house under the licence so long as the children were of school age and the accommodation was
reasonably required.
In the case of Chandler v Kerley a man bought a house for his mistress and her husband on the
understanding that he and the woman would live there together and that eventually they would
marry. The relationship broke down however and the man wanted his mistress to leave. The court of
appeal held that the woman had a contractual licence to remain in the property, which could only be
terminated on reasonable notice, which in this case they decided was 12 months. However, these
circumstances will not always automatically lead to the finding of an implied contractual licence.
Therefore in the case of Horrocks v Forray which had similar circumstances to the above two cases in
that a woman had moved into the property with her lover in return for a promise that she should
have a permanent home, the Court of Appeal rejected her claim for a contractual licence on the first
ground, that the parties had no intention to enter into a legally binding agreement and secondly
they considered that she had provided no consideration.
Track/Slide 9
In terms of enforcing a contractual licence against the original licensor the position today is that if
the licence is for a specified period such as the length of a football match or a film, it cannot be
revoked until that contractual period has expired. This however has not always been the position. In
the 19th Century the position in relation to a contractual licence was the same as for a bare licence.
In other words it could be revoked at any time by the licensor. In the case of R. v Inhabitants of
Horndon-on-the-Hill in 1816 a licence was granted to build a cottage on some land and annual
payments were made to the licensor. However the courts held that the licence was revocable at the
will of the licensor. Similarly in the case of Wood v Leadbitter a spectator was ejected from
Doncaster Race Course even though he’d bought a ticket. This gave him a contractual licence. He
sued the race course for damages, for battery and false imprisonment. However the courts held that
the licence was revocable at the will of the race course owners even though there had been a breach
of contract. When he refused to leave he became a trespasser and so they could use reasonable
force to remove him. It is interesting to note that the claim in this case was for battery and false
imprisonment and not for breach of contract. This was because a claim for breach of contract would
only lead to damages for the cost of the ticket whereas a greater award of damages would have
been made for false imprisonment and battery.
By the 20th Century the position had changed considerably to the position that a licence for a
specified period cannot be revoked until that period has expired. Hurst v Picture Theatres Ltd
revolved around similar facts to Wood V Leadbitter except that it was a cinema rather than a
racecourse that the person was ejected from. In Hurst v Picture Theatres Ltd a cinema goer was
asked to leave because the manager of the cinema thought incorrectly that he had not paid for his
ticket. He refused to leave and was ejected. The courts however found that he had a contract with
the cinema and therefore that contract couldn’t be revoked until the contractual period, in other
words the length of the film, had ended. The courts decided that there was an implied term that the
contractual licence would not be withdrawn until the end of the film. One of the reasons for the
different approaches in these two cases is the different approach taken to the situation at common
law and in equity. In common law damages would be awarded for breach of contract, in other words
for the cost of the ticket, but the common law would not compel performance of the contract as was
seen in Wood v Leadbitter where although an award could have been made for damages for the cost
of a ticket the common law rules would not compel the racecourse to perform the contract, in other
words to allow the spectator to remain at the racecourse. The reason for this was that Wood v
Leadbitter was a case decided in 1845 which was before the 1875 Supreme Court of Judicature Acts
came into force, which made equitable remedies available to all courts. After the Supreme Court of
Judicature Acts of 1873 and 1875 came into force equitable remedies such as injunctions and
specific performance were available and therefore in equity a licensee did have a right to remain at a
racecourse or in a cinema for the remainder of the film as was the case in Hurst v Picture Theatres
Ltd. This was because the courts in theory could have granted an order of specific performance to
force the cinema to allow him to remain.
While the position in relation to a contractual licence for an event such as a film or a race meeting
which has a specified end period is now relatively straight forward, the question arises as to what
about a licence for an unspecified period. In Winter Garden Theatre v Millenium Productions the
court held that where the licence was for an unspecified period there was an implied term in the
licence that it could only be terminated on reasonable notice, what the court in the Winter Garden
case referred to as the packing up period. Again what is considered reasonable notice or a
reasonable packing up period will vary depending on the facts of each individual case.
Track/Slide 10
The next issue to be considered is whether a contractual licence can be also enforced against a
successor in title. Traditionally the position was that the normal contractual principles should apply.
As we have seen in Hurst v Picture Theatres Ltd it has been established that a contractual licence is
enforceable like any other sort of contract. However the flipside of this means that under the
general contractual principles although the benefit of a contract may be assigned, the burden cannot
and therefore, as was seen in Clore v Theatrical Properties Ltd, a contractual licence could not be
enforced against the successor in title to the original licensor.
Track/Slide 11
However in the 1950s it looked for a while like a contractual licence might be enforceable against
successors in title and it appeared that the status of a contractual licence had been elevated to equal
that of an equitable interest in land. This arose from the case of Errington v Errington and the
judgement of Lord Denning. As you will recall from the previous lecture, Errington v Errington was a
case where a young married couple were allowed to live in a property belonging to the husband’s
father. The marriage broke down and the father died. The mother then revoked the licence. Lord
Denning, in giving judgement, held that the contractual licence gave rise to an equity, in other words
an equitable interest in the land, in favour of the daughter-in-law. This would be enforceable against
third parties such as successors in title under the usual notice rules. As this was dealing with
unregistered land, a purchaser of the value without notice of the interest would take free from it as
it was not a class of land charge that could be protected by entry in the central land charges register.
However, in this case the mother acquired the property on the father’s death under the will and
therefore was not a purchaser for value and was therefore bound by the licence or, as Lord Denning
would put it, by the equity.
Track/Slide 12
Errington v Errington was followed by the case of Binions v Evans, another case in which Lord
Denning gave judgement. In this case Lord Denning again held the contractual licence was binding
on the purchasers because they had acquired the property with notice of its existence. However, the
other judges involved in the case, although coming to the same conclusion, expressed reservations
about Lord Denning’s interpretation of the position regarding a contractual licence.
Track/Slide 13
The position was finally clarified by the Court of Appeal in Ashburn Ansalt v Arnold in 1989 where the
court reviewed cases where contractual licences had held to be equitable interests and decided that
these cases, primarily involving Lord Denning, were incompatible with earlier House of Lords cases.
Therefore the position reverted back to the traditional position that a contractual licence was not
binding on the successor in title as they had not been a party to the original contract.
Track/Slide 14
As Lord Justice Fox said in Ashburn Ansalt v Arnold “Before Errington the law appears to have been
clear and well understood. It rested on an important and intelligible distinction between contractual
obligations which gave rise to no estate or interest in the land and proprietary rights which, by
definition, did. The far-reaching statement of principle in Errington was not supported by authority,
not necessary for the decision of the case…the Errington rule was neither practically necessary nor
theoretically convincing.”
Track/Slide 15
The final type of licence to consider is a licence by estoppel but before we look at the details of the
licence, we need to look first at what is meant by an estoppel. As Lord Denning said in the case of
Crabb v Arun District Council “Equity will prevent a person insisting on his strict legal rights…when it
would be inequitable for him to do so having regard to the dealings which have taken place between
the parties.” Perhaps the best way of explaining this is to look at the facts of the Crabb v Arun
District Council case. In this case Mr. Crabb had a right of access to some land he owned through a
gate leading from a road which was owned by the council, over which he had a right of way. Mr.
Crabb wanted to sell the part of his land which adjoined the gate but he intended to retain a portion
of it which lay further along the road. The council agreed informally to grant him a right of way along
the further stretch of road and to allow him to gain access to his property by a new gate which he
would construct. Relying on this understanding, Mr. Crabb completed the sale without reserving any
right of way to the existing gate. However, the council did not grant the extended right of way and
fenced the road so that the plot retained by the plaintiff Mr. Crabb became inaccessible and
landlocked. The Court of Appeal held that the council had led Mr. Crabb to believe that he would be
granted a right of way and thus they had encouraged him to act to his detriment in selling part of his
land without reserving an easement over it in order for him to get to his retained land. This, the
Court of Appeal held, gave rise to an equity in Mr. Crabb’s favour which the court would satisfy by
requiring the council to grant the necessary right of way and right of access to Mr. Crabb’s retained
land.
Track/Slide 16
A licence by estoppel is a remedy under the doctrine of proprietary estoppel. Before looking in detail
at what constitutes proprietary estoppel it is worth spending a few moments looking at the
difference between promissory and proprietary estoppel, which are the two forms of equitable
estoppel. In promissory estoppel one party promises not to enforce their legal rights and the other
party does something in reliance on that promise. The first party will then not be allowed to enforce
their legal rights to the detriment of the second party. Proprietary estoppel is where a land owner
either encourages or goes along with somebody’s mistaken belief about their rights in the
landowner’s property. For example if you start to build a house on land which I own in the mistaken
belief that it’s your land, if I realise your mistake but don’t tell you and let you continue building the
property, equity will not allow me to then claim possession of the house once you’ve finished
building it.
In order to make out proprietary estoppel there are three conditions which must be met. First there
must be a representation. Secondly there must be reliance placed on the representation. In other
words the representation must have influenced somebody to act in a particular way. The burden is
on the person who made the representation to show that it is not being relied on. The final
condition in making out the requirement for proprietary estoppel is that in reliance on the
representation the person must have acted in some way to their detriment. This often includes the
payment of money but doesn’t necessarily have to be so.
An example of these conditions can be seen in the case of Inwards v Baker. Here a son built a
bungalow on his father’s land at the suggestion of his father but at his own expense. Once the
bungalow was completed, the son occupied it in the belief that he would be allowed to remain there
for as long as he lived. However, when as expected his father predeceased him, the son discovered
that his father had left his estate in the land to somebody else in his will. The beneficiary under the
will tried to evict the son from the bungalow. When the case reached the Court of Appeal the court
held that the son had a licence which entitled him to remain in the property as long as he wished.
This was on the basis that his father had made a representation encouraging him to build the
bungalow on his land and he had relied on that representation. In other words, he had constructed
the bungalow. The act to his detriment was considered to be that he had altered his position. In
other words, he had constructed the bungalow at his own cost and lived in it on the basis of his
father’s representation to him.
The case of Re Basham is an example where acting to one’s detriment does not necessarily involve
the payment of money. In Re Basham the detriment involved was looking after a stepfather,
providing meals for him and working in his house and garden and remaining living in the area so that
he could look after the stepfather instead of moving away.
Track/Slide 17
The next question to look at is how does the concept of proprietary estoppel affect licences.
Basically if proprietary estoppel can be made out, this can prevent an owner of land relying on their
legal rights if they have encouraged somebody in the mistaken belief that they have some right in
the property. Therefore the owner of the land may be estopped from denying the existence of the
licence or in certain circumstances revoking the licence. This can be seen in the case of Plimmer v
Wellington Corporation, a case involving land in New Zealand. Plimmer occupied part of the
foreshore of Wellington harbour under a licence from the Crown. Encouraged by the Crown, the
government in this case, and in fact at its own request, he incurred expenditure in building and later
extending a jetty on the land. Later on some questions were raised about the nature of his interest
in the land and it was held by the Privy Council that he had acquired an irrevocable licence because
as they said in his dealings with the government were sufficient to create in his mind a reasonable
expectation that his occupation would not be disturbed.
Another example is the case of Pascoe v Turner. Pascoe and Turner lived together in a house which
was owned by Pascoe for 10 years. Pascoe moved out telling Turner that “the house and contents
are yours”. In reliance on this, Turner spent her savings on improvements to the house but Pascoe
did nothing to transfer the house to Turner and a few years later attempted to terminate her
licence. When the matter reached the court it was held that the events gave rise to a case of
proprietary estoppel. This was because the Court of Appeal said the representation had been made
“the house and the contents are yours” and that Turner, in reliance on the representation, had
remained in the house. To her detriment she had also spent her savings on improvements to the
house. Once the Court of Appeal decided that a case of proprietary estoppel had been made out
they had to decide what the remedy should be. The choice they were faced with was either granting
the plaintiff a licence for life or requiring Pascoe to transfer the fee simple freehold of the property
to Turner. In the event, given the acrimonious relationship between the two parties, the court
decided that the freehold of the house should be transferred by Pascoe to Turner.
Track/Slide 18
However it must always be remembered that proprietary estoppel is an equitable remedy and
therefore the courts have a discretion as to what remedy if any to award. This can be seen in the
case of Matharu v Matharu where a father owned a house which was occupied by his son and
daughter-in-law. The daughter-in-law however thought the house belonged to the son although it
actually belonged to the father. The marriage broke down and the son died. The father sought
possession of the house. However the court held that this was a case of proprietary estoppel due to
the daughter in law’s mistaken belief regarding the ownership of the house which the father had
never done anything to set straight. So far the circumstances of this case are not too dissimilar from
the circumstances of Pascoe v Turner, which we have just been looking at. However, the remedy
ordered by the courts differed substantially. While in Pascoe v Turner the court ordered the freehold
of the property to be transferred to Turner, in Matharu v Matharu the courts granted a licence to
the wife to remain in the property for her life but only on the basis that she should take
responsibility for repairs and the financial outgoings on the property.
Track/Slide 19
Another example of a court’s equitable discretion is the case of Sledmore v Dalby. Sledmore sought
possession of a house which she owned but which was occupied by Dalby, her son-in-law for over 30
years. Dalby argued that when his wife was alive, Mrs. Sledmore’s daughter, he had been led to
believe that the house would be left to her on her parents’ death and he had therefore made various
improvements to the house at his own expense. He had remained in the house for 12 years after his
wife’s death and assumed that he would be allowed to remain there for the rest of his life. While the
court held that Dalby had established a proprietary estoppel, they still made a possession order in
favour of Mrs. Sledmore. This was because of the relative circumstances of the parties and the
proportionality between the remedy requested and the detriment that this would cause. Dalby’s
children had all grown up and left home and he was in employment and had access to other
accommodation and he only used the property once or twice a week, in effect as a holiday home. On
the other hand Mrs. Sledmore could no longer afford to remain in her current property and needed
to move into this house in order to live within her reduced means.
Track/Slide 20
While we have seen that a licence by estoppel may be enforced against the original licensor, the
question then arises as to whether it may be enforced against successors in title. This was an issue in
the case of Greasely v Cooke. Ms. Cooke had lived in the property for over 40 years. She had started
for the family at age 16 and over the years had come to be seen as part of the family. So much so
that she had actually been stopped being paid after 10 years working for the family. She lived with
one of the brothers of the family and cared for other members of the family and she was assured
that she could regard the property as her home for the rest of her life. However, when the brother
died the younger generation who inherited the house tried to recover possession of it. The courts
however held again that this was a case of proprietary estoppel and that Mrs. Cooke had the right to
stay in the property for as long as she wished. However, it is important to note that her successors in
title in this case were not purchasers for value but had inherited the property under the will so the
question arose would the position be any different if the successors in title had been purchasers for
value.
Track/Slide 21
This was resolved in the case of ER Ives Investment Ltd v High. Here developers constructed a block
of flats but accidentally allowed the foundations to encroach onto their neighbour’s land. The
neighbour accepted a right of way over the courtyard of the flats in compensation. In reliance on this
right of way, the neighbour built a garage on part of his land that was only accessible through the
courtyard. When the developer sold the flats the new owners argued that as the right of way was a
class of land charge – we’re dealing with unregistered land here – it should have been registered as a
class D3 land charge and therefore as it was not registered, they were not bound by it. The court
held however that this was a case of proprietary estoppel in that the neighbour had relied on the
representation about the right of way to build the garage. The court went on to hold that this
proprietary estoppel was in effect an equity and not a class of land charge and therefore was binding
on the purchaser who had notice of it. In this case the new owners of the flats had known about the
agreement for the right of way through the courtyard before they bought their flats. Therefore they
were bound by the right of way.
However, this does raise an interesting question in that it appears to elevate a licence by estoppel to
some form of quasi interest in land. It is interesting to compare the position here in relation to the
licence by estoppel to that of a contractual licence under Errington v Errington and Ashburn Ansalt
and Arnold where as we have seen the court have been very firm to squash any attempt to elevate a
contractual licence into a similar from of equity and land.
Track/Slide 22
The position in registered land is somewhat more straightforward since the introduction of the Land
Registration Act 2002 which gives statutory authority for the proposition that equity arising from
proprietary estoppel is of a proprietary nature. As section 116 of the Act states, “It is hereby
declared for the avoidance of doubt that in relation to registered land an equity by estoppel has
effect from the time the equity arises as an interest capable of binding successors in title”.