Vauxhall Motors Ltd (formerly General Motors UK Ltd) v Manchester Ship Canal Co Ltd

This appeal concerned equitable relief from forfeiture following termination of a perpetual licence for non-payment of an annual sum of £50 under clause 5 of the licence. The central legal questions were (a) whether equitable relief from forfeiture requires that the rights forfeited be proprietary in nature, or whether possessory rights in relation to land suffice, and (b) whether the court’s jurisdiction should be extended further to any right to use property. The court reviewed the authorities (including Shiloh Spinners, The Scaptrade, On Demand and Çukurova) and reaffirmed the core requirement that the forfeiture provision must operate as security for a primary obligation. The court held that equity’s jurisdiction is not confined to proprietary interests and may extend to possessory rights in relation to land. It rejected a wider test extending relief to any mere right to use property. Applying those principles, the Supreme Court concluded that the licence conferred rights sufficiently analogous to possession and control of the spillway infrastructure to engage the jurisdiction, so that the Court of Appeal was correct to treat the rights as possessory; the appeal was dismissed.

Background and parties:

• The Manchester Ship Canal Company Ltd (MSCC) owned riparian land adjacent to the Manchester Ship Canal. Vauxhall Motors Ltd (Vauxhall) owned a neighbouring factory site and, by a land exchange and a perpetual licence dated 12 October 1962, acquired perpetual rights to discharge surface water and treated effluent into the Canal, to construct and operate the associated infrastructure (the "Spillway"), and to access it. The licence required payment of an annual sum of £50 and contained clause 5 permitting termination for non-payment or breach.
• In 2013 Vauxhall failed to pay the £50. MSCC served notice and terminated the licence under clause 5. Vauxhall sought relief from forfeiture in March 2015. HHJ Behrens QC granted relief at first instance; the Court of Appeal [2018] EWCA Civ 1100 affirmed on the ground the rights were possessory. MSCC appealed to the Supreme Court.

Nature of the claim and procedural posture:

• Vauxhall sought equitable relief from forfeiture to restrain the effect of termination and preserve its rights to use the Spillway. The only live issue on this appeal was the threshold question of jurisdiction: whether the court can grant relief where the rights forfeited under a perpetual licence are not proprietary but possessory, and whether the jurisdiction should extend to any rights to use property.

Issues framed by the court:

1. Is a proprietary interest in land required for equitable relief from forfeiture, or are possessory rights sufficient?
2. If possessory rights suffice, do the rights granted by the licence amount to such possessory rights?
3. Should the jurisdiction be extended still further to cover any right to use property (whether real or personal)?

Court's reasoning:

• The court reviewed precedent tracing the development of relief from forfeiture, including limits expressed in The Scaptrade, subsequent authority on personalty (On Demand, BICC, Çukurova) and cases concerning land (Bland, JA Pye and Union Eagle). It reaffirmed the long-standing principle (from Shiloh Spinners) that equity intervenes where the forfeiture provision operates as security for some primary obligation and where relief would be appropriate and limited by equitable considerations (conduct of applicant, gravity of breach, disparity between value forfeited and damage caused).
• The court rejected the submission that relief is limited strictly to proprietary interests in land and accepted that possessory rights in relation to land can fall within the jurisdiction. It declined to adopt Vauxhall’s broader submission that any right to use property should trigger jurisdiction. Extending the jurisdiction so broadly would undermine legal certainty and discard the principled boundary developed in prior authorities.
• Applying the correct test for possession (factual custody and control plus an intention to possess), the court concluded that the licence in this case conferred rights analogous to possession and control of the Spillway: Vauxhall constructed, operated and maintained the infrastructure, had effectively exclusive perpetual use, and the rights were granted in perpetuity. The obligation to remove infrastructure on termination did not mean nothing was forfeited in reality.
• The judge’s exercise of discretion in granting relief was not challenged on appeal to the Supreme Court.

Conclusion: The Supreme Court dismissed MSCC’s appeal, holding that equity may relieve against the forfeiture of possessory rights in land and that the licence in question did confer such possessory rights.

This was an appeal from the Court of Appeal which was dismissed. The Supreme Court held that equitable relief from forfeiture is not confined to proprietary interests and extends to possessory rights in relation to land where the forfeiture provision operates as security for a primary obligation; the court rejected an extension to any mere right to use property. Applying the possession test (factual custody and control plus intention to possess), the licence granted Vauxhall possessory rights over the Spillway and thus engaged equity’s jurisdiction. The appeal is dismissed on those grounds.

First instance: HHJ Behrens QC granted relief from forfeiture. Court of Appeal: [2018] EWCA Civ 1100 (Lewison LJ et al) affirmed that the rights were possessory and upheld relief. Appeal to the Supreme Court: [2019] UKSC 46, appeal dismissed.