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LICENSES I: TYPES
i. IntroductionThere is a huge variety of rights enjoyable under a license, which makes it difficult to consider them as a single category.
Many categories are difficult to enforce which means it's difficult to accord proprietary status to licenses
Cases haven't differentiated according to license type, but one way forward is to give greater protection to certain types of licenses (eg. those involving exclusive possession)
ii. Types of licenses
Licenses coupled with an interest
Implied into proprieta ry interests that require entering onto land
Telling the licensee to leave,
but granting a reasonabl e time to leave
(perhaps months where the licensee's home is involved)
A simple gratuitous permission to enter land
Sale by licensor will likely be treated as implicit terminatio n of the license
(analogy with tenancy at will) but at any rate purchaser can terminate it
Permission to enter another's land for exercising a proprietary interest
(eg. a profit) that can be in a
Hurst v Picture
Theaters Ltd: C was watching a film in D's cinema and D evicted him in breach of contract and C sued for assault having to prove that he had a right to be on the premises. CoA said there was a license chattel
Paternoste r) or in the land itself
Contract Failed ual leases,
License family living arrangem ents etc.
(no formalitie s necessary
) - can also be assigned without formalitie s
Estoppel As it is
License equitable and proprieta ry it must be in writing
Cannot be revoked by breach of contract.
Does not bind purchaser s so will terminate on sale.
Can also terminate if the other party breached the contract
(as Equity will not assist them)
permission to enter land created by contract
coupled with an interest, though this is controversial because there was no proprietary interest,
only a contractual right to watch the film.
Probably not binding.
that arises on the detrimental reliance of the licensee.
Hardwick v Johnson: a mother allowed her son and daughter-inlaw to occupy a house for paying PS7 a week towards purchase price (though the sum amounted to a mere 3%). CoA held that mother couldn't regain possession when the son left the daughter-in-law.
There is little justification save the contract for the license to continue indefinitely. iii. Contractual Licenses
I. Is it revocable by the licensor?---
If it is to have any chance at being proprietary (binding purchasers), it first has to be irrevocable by the licensor
Orthodox 19C approach: Wood v Leadbitter - licensor could always terminate a contractual license even if it would be in breach of contract because the license is seen as separate (Hurst therefore had to use the license coupled with an interest analysis to make it irrevocable)
But in Hurst Buckley LJ said that a license with an agreement not to revoke also worked, because Equity will intervene:
o Specific performance of the contract
Or prevent the licensor from revoking the license in breach of contract
So because an Equitable remedy is available Equity will treat the licensee as having a right to remain should the licensor evict him
Problem with this analysis: Equity is acting retrospectively - Hurst had no opportunity to seek a remedy before eviction. But Equity nevertheless treats him as if he had obtained an injunction preventing eviction, which is the ordinary approach where there has been an interest in land and there's no reason why it shouldn't be applied to licenses
Today's position: Winter Garden Theatre v Millenium Productions - licensor purported to revoke a license to produce plays in licensor's theatre.
o Lord Greene MR (CoA): the license shouldn't be regarded as an entity separate from the contract but as a contractual right subject to normal contractual rules. On the facts, the license was intended to be irrevocable and thus there was an undertaking not to revoke that the
Court will give effect to. It didn't matter that it had been purportedly revoked by the time the case came to court
HL found that on the facts the license was intended to be revocable, but the analysis remains authoritative
Next case: Hounslow LBC v Twickenham Garden Developments - C landowner contracted with D to do building work. C was dissatisfied with D's progress and sought to terminate the contract and applied for an order that D leave.
o Megarry J: the claim failed. C would succeed if D had broken the contract
(but this was disputed and still unresolved), but Equity would not help a landowner to break a contract (though accepting the alternate analysis that specific performance may well be available to assist D)
o This is a different analysis of why Equity recognizes a license: it declines to assist the licensor
Verrall v Great Yarmouth BC: The National Front had contracted to hold their conference in D's premises, and when Labour took control of the council, the license was purportedly revoked (without having been entered into possession so only possible equitable remedy was specific performance).
CoA held that specific performance should be ordered as damages are inadequate because the National Front had been unable to find another venue.
I(b): Are all contractual licenses irrevocable?-There are some contrasting 20C decisions:
Thompson v Park: two headmasters agreed to share the school of one of them
(licensor), the license purported terminating when disagreements arose.
o CoA held that the license had been revoked (lawfully or not) and licensee had no right to return.
-Goddard LJ: Licensors can revoke licenses in breach of contract subject to having to pay contractual damages (this was decided after Winter Gardens and considered to be inconsistent with it and bad law - Verrall)
-The court cannot specifically enforce an agreement for two people to live peaceably under the same roof (more defensible)
-Megarry J observed in Twickenham Garden that this court was undoubtedly influenced by the high-handed conduct of D (a 'riot') -
as he couldn't improve his position by forcible entry, he should be treated as if not in possession
AUS and NZ took different approach:
o Cowell v Rosehill Racecourse (High Court of AUS): accepted the general contractual analysis of English courts but Australian courts are far less willing to give equitable remedies - they will not assist licensees in entertainment contracts (eg. horse-racing) or building contracts
Mayfield Holdings v Moana Reef (NZ) - adopted similar approach to a building contract
This restrictive approach is well-justified:
o Specific performance is discretionary and courts should be cautious in giving it outside contracts for conventional proprietary interests - is it really right to force someone to continue to employ a builder that he doesn't like? The Australian approach gives the licensor greater control over his own land - it reflects society's expectations better than English cases
II. Licensees and PurchasersIf licenses are to bind purchasers, it must be by equitable interest and not contract (no privity)
Early decisions deny binding effect: --o King v David Allen: HL held that a license to place an advert on a building didn't bind a lessee from the licensor
Clore v Theatrical Properties: CoA held that a license to use the front part of a theatre didn't bind licensor's assignee
Mid 20C developments:
o Errington v Errington: a successor in title is bound. Licensor bought a house for son and daughter-in-law that they would own it provided they paid the mortgage (2/3 purchase price). He died and widow (successor)
sought possession when son left his wife. Was either decided because 1)
there was an estate contract for future entitlement or 2) the payment gave rise to estoppel (though estoppel didn't develop until after this case was decided)
-Denning: licenses can no longer (since cases like Winter Gardens)
be revoked in breach of contract - a purchaser for value without notice is the only person who can escape this [Denning merely stated a principle without authority or explanation]
o Bendall v McWhirter: Denning said that the equitable remedy available against the licensor binds the purchaser (like in restrictive covenant)
o National Provincial Bank v Ainsworth: HL rejected Denning's analysis,
denying the deserted wife's equity. Lord Upjohn and Lord Wilberforce said that equitable remedies do not bind purchasers unless there is a proprietary interest
Since Ainsworth most developments centred on estoppel but Denning decided Binions v Evans on the basis that a contractual license is a proprietary interest and Goff LJ applied it in DHN Food v Tower Hamlets
Courts reviewed authorities in Ashburn Anstalt v Arnold (licensee sold his shop to a developer subject to a license to retain the shop rent free until redevelopment took place)
o Fox LJ (CoA): contractual licenses cannot affect successors in title.
Errington was the only contrary authority and it had not been supported by any authority so was unconvincing
Can be said that Fox LJ's dicta was obiter (because the license in that case was held to be a lease) but he did give very full consideration to the license question - so for the time being licenses must be seen not to bind successors in title
S4(1) LPA 1925 supports Ashburn Anstalt: 'an equitable interest in land shall only be capable of being validly created in any case in which an equivalent equitable interest in property ... could have been validly created' before the Act
(courts can't develop new proprietary interests)
S116 LRA 2002 is a possible way of attacking Ashburn Anstalt: 'for the avoidance of doubt' a 'mere equity' is capable of binding purchasers (supports argument that a contractual license is a mere equity binding purchasers -
would restore the equitable remedy analysis rejected in Ainsworth. BUT a wide interpretation of s116 will unlikely be adopted because 'avoidance of doubt'
means (per Law Comm) a restatement of the present law) iv. Constructive Trusts--
Any form of license can be protected by a constructive trust (but most influential in contractual licenses)
Based on Binions v Evans: purchaser agreed to buy land subject to licensee's rights and paid a reduced purchase price accordingly. Denning imposed a CT,
approved by CoA in Ashburn Anstalt. CTs get around King and Clore -
unnecessary to ask whether an existing interest binds purchasers (a fresh trust arises at time of sale by virtue of purchaser's promise
When? Purchaser must promise to give effect to the license (NOTE: in DHN
Food v Tower Hamlets Denning said that a CT could be imposed on the licensor, and this was supported by Lord Browne-Wilkinson in Re Sharpe. But this would be to give all contractual licenses the status of interests in land by the back door and was condemned in Ashburn Anstalt)
So... Is it possible to circumvent Ashburn Anstalt and numerus clausus simply by creating a trust (eg. creating an easement without dominant land by declaring an express trust)? Trusts bind purchasers whether or not the interest is proprietary... But two questions:
o Can there be a trust of a non-proprietary beneficial interest? Purpose trust cases and Binions suggest YES
o Does that constructive trust bind purchasers? Problems arise in the context of licenses. A is licensor and licenses to B. C buys A's land and promises to be bound by the license. Binions applies. D then buys the land from C, without promising anything. Will the constructive trust bind him? Why should it matter just because he bought the land from C and not directly from A (where Ashburn Anstalt applies and D will not be bound)?
Thus 'instinct' goes against these CTs binding purchasers, but Binions itself can be justified because of the purchaser's promise. Chattey v Farndale
Holdings said that the CT didn't bind subsequent purchasers because they didn't promise to respect the interest protected under it. But this is not conclusive, because in that case the purchaser couldn't be affected by the trust even if it were binding, because it wasn't registered. The issue remains open.
v. Estoppel LicensesNormal case: C is exercising rights over land in the belief that there is a right to do so, acts to his detriment and owner is aware of the circumstances.
Moriarty argued that the court is doing little more than avoiding formality rules in recognizing conventional property rights, but this is wrong because:
o Estoppel can give effect to a license that has nothing to do with a property right (eg. not involving exclusive possession - King and Clore)
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