Archive for the ‘licence coupled with an interest’ Category

Implied terms as to termination of contractual licences

January 25, 2013

In Australia Blue Metal Ltd v Hughes ([1963] A.C. 74, PC) ABM granted H a licence to mine certain minerals on a specified portion of ABM’s land. There was no licence term nor any express provision as to how the licence could be brought to an end. ABM gave H notice requiring H to leave the land immediately.

The Privy Council held that this was not a licence coupled with an interest as Hughes had no right to extract any specified quantity of the minerals. This was either a case in which the licence could be terminated at any time on reasonable notice or it could be terminated with immediate effect but Hughes would then have a reasonable period of grace in which to leave. It was unnecessary to decide between these alternatives since either would lead to the same practical conclusion since Hughes had not been required to leave the land immediately and a reasonable period had since elapsed.

The Privy Council rejected the argument that the implied term was that ABM had to specify the notice period in the notice (and that this must be reasonable). There would need to be clear evidence to justify the implication of such a term.

On whether there was an implied term that notice should be reasonable, Lord Devlin said:

‘The question whether a requirement of reasonable notice is to be implied in a contract is to be answered in the light of the circumstances existing when the contract is made. The length of the notice, if any, is the time that is deemed to be reasonable in the light of the circumstances in which the notice is given.’ (p. 99)

On the construction of terms as to notice generally, he said:

‘An express provision about notice can be in any form which the parties care to adopt. If the term is that a contract is to terminate six months (or a reasonable time) after notice given, the notice need amount to no more than an election to terminate. It will automatically take effect after the expiry of six months (or of such period as the court subsequently determines to be reasonable). On the other hand, an express term can prescribe the form and content of any notice to be given and then a notice in the wrong form or with insufficient content will be bad. If the contract is, as here, entirely silent about notice and a term has to be implied, the nature and requirements of the term to be implied must be settled according to the ordinary rules governing the implication of a term. The question then will be whether the necessary implication extends beyond that of a simple notice to embrace a notice in a particular form or with a particular content.’ (pp. 100 – 101)

Licence coupled with a grant: injunction available

January 16, 2013

In James Jones & Sons Ltd v Earl of Tankerville ([1909] 2 Ch. 440) D entered into a contract with P under which P had the right to cut trees on D’s land and remove the timber. D repudiated the contract and took back possession. P sought an injunction restraining D from preventing due execution of the contract. The question was whether this was possible or whether P was restricted to damages only. The injunction was granted:

‘A licence to enter a man’s property is prima facie revocable, but is irrevocable  even at law if coupled with or granted in aid of a legal interest conferred on the purchaser, and the interest so conferred may be a purely chattel interest or an interest in realty.’ (Parker J. at 442)

The same applies even where the interest was not created under seal so that the interest is purely equitable (443). In any event, it was arguable that P had a legal interest in the timber (444).

A modern example of a licence coupled with an interest

February 8, 2011

A licence to use a signboard granted at the same time as, and in connection with, the sale of a shop could be a licence coupled with an interest. It is irrevocable and binding on third parties such as a purchaser from the licensor.

In Incorporated Owners of Kwai Chung Plaza v Giant Earnings Limited ([2009] HKEC 536) Giant Earnings Limited bought a shop on the ground floor of Kwai Chung Plaza. At the time of the sale of the shop, the developer had reassured Giant Earnings that the owners of the shop and it tenants would be allowed to use the signboard free of charge. The developers later transferred ownership of the signboard to the Incorporated Owners. The Incorporated Owners purported to terminate the licence. It was held that this was a licence coupled with an interest. The licence was connected with the purchase of the shop. As a result, the licence was irrevocable and binding on third parties. It is slightly puzzling that the resulting declaration was that the licence could not be revoked while Giant Earnings were the legal and beneficial owners of the shop. This seems inconsistent with the idea that the licence is coupled with title to the shop. One would have thought that it should therefore subsist whoever owns the shop.