Lymington Marina Ltd v MacNamara & Ors

A contractual consent clause allowing a licensee to authorise a third party to exercise all mooring rights for one to twelve months permitted successive sub-licences. The agreement imposed no requirement that the licensee first use the berth personally or that sub-licensing remain ancillary to personal use.

The licensor’s approval discretion concerned the identity and suitability of the proposed sub-licensee. It could not be used to prevent a form of sub-licensing which the agreement permitted, or to advance the licensor’s commercial interests. A refusal based on an erroneous construction of the agreement was outside the contractual discretion and, alternatively, unlawful as Wednesbury unreasonable. No general duty to give reasons existed, although inadequate reasons could support an inference that no proper grounds existed.

The claimant operated a marina under long-term licence agreements granting transferable rights to moor a yacht. Clause 3(k)(ii) permitted the licensee, subject to the claimant’s approval of the third party, to authorise that third party to exercise all the granted rights for between one and twelve months.

The first defendant, having no current use for the berth, sought approval for successive sub-licences to his brothers. The claimant refused approval, contending that successive or continuous sub-licences were outside clause 3(k)(ii), that personal use by the licensee was required, and that its approval discretion was effectively absolute. The central issues were the construction of the sub-licensing clause and the scope of the approval discretion.

1. Construction of clause 3(k)(ii). The clause permitted a licensee to authorise a third party to exercise all the clause 1 rights for between one and twelve months. It imposed no requirement that the licensee first use the mooring rights personally and contained no restriction against successive sub-licences. The only express restrictions were that the sub-licence covered all the clause 1 rights, lasted between one and twelve months, and involved a sub-licensee approved by LML.
2. Scope of approval. The proviso concerned approval of the proposed third party, not approval of the transfer as such. LML could consider the sub-licensee’s identity, suitability and proposed use of the Marina. It could not refuse approval solely because it considered the proposed exercise of the contractual power unauthorised. If a proposed arrangement fell outside the agreement, it was invalid and LML’s remedy was to prevent the sub-licensee exercising rights which could not be granted.
3. Relevant considerations and legality. LML could not use the discretion to promote its own or Berthon’s commercial interests, to reduce administration, or to encourage surrender of the licence. Its refusal was based on an erroneous construction of clause 3(k)(ii), and was therefore outside the contractual discretion. Alternatively, a decision founded on that mistaken view of the agreement was Wednesbury unreasonable.
4. Reasons and disposition. The agreement imposed no general duty to give reasons. However, the absence of reasons conforming to the contractual grounds for refusal could indicate that no proper reasons existed. LML was not entitled to refuse approval of the proposed 2003 sub-licences on the grounds relied upon. The form of the declarations was to be settled after counsel had considered the judgment.

The judgment describes earlier proceedings concerning the same licence. In the second action, a district judge granted Part 24 judgment to the defendants; Southampton County Court appeal dismissed by H.H. Judge Thompson Q.C. on 2 January 2003. The Court of Appeal refused permission for a further appeal.