Licence with no provision for termination – implied term

The Hong Kong Polytechnic University v Rehabaid Society ([2022] HKCFI 2830) concerned a licence granted by the Hong Kong Polytechnic University (‘the licensor’) to Rehabaid Society (‘the licensee’) in 1988.

The licence contained no express provision as to how it could be ended.

Part of the motivation for the grant of the licence was that the parties foresaw the possibility of fruitful collaboration between the licensee and the licensor’s Rehabilitation Engineering Centre (‘the REC’).

This collaboration ceased and the licensor was very short of space for its other activities.

It argued that there was an implied term that the licence was revocable on reasonable notice should the collaboration between the licensee and the REC end.

The licensee argued that the licence was intended to be irrevocable.

The court agreed that whether a licence was revocable or not depended on the proper construction of its terms ([73]).

The party who seeks to terminate the licence has the burden of proving its right to do so ([82]).

The court reviewed the law on implied terms (Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Limited [2016] AC 742 and Lo Yuk Sui v Fubon Bank (Hong Kong) Limited [2019] HKCA 261).

The court found on the facts that there was no implied term that the licence would end should the collaboration between the licensee and the REC cease.

The licensor’s claim that it was entitled to possession was dismissed and specific performance of the licence was ordered.

This did not mean that the court accepted that the licence was irrevocable ([125]) only that it could not be revoked in the circumstances argued for by the licensor.

Michael Lower

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