Licenses Exam Notes

Licenses

What is a Licence?

  • A permission granted by an occupier of land, to a person to do something on that land that would otherwise be a trespass.
  • Licences are NOT an estate or interest in land - personal rather than proprietary interests in nature.
  • Proprietary holders (Owners/Lessees) can grant licences to land.
  • Usually a usage right

Different types of licences confer different kinds of privileges:

  • May be merely a defence to an action in trespass and a right to a reasonable period to leave the land after revocation.
  • OR, may be part of a contractual relationship (supported by valuable consideration) or give rise to an equitable estoppel (Makes them difficult to revoke).
  • Licensee's themselves who hold a right of occupation and sufficient rights of control over land has a right to bring trespass action against third parties.

Licences vary enormously in their terms and complexity:

  • Social invitation to visit
  • Implicit permission to enter a garden and approach the door of a house
  • Exclusive right to use a "booth" in an airport terminal as a business base
  • Right for contractors to enter on property to complete work
  • Purchase of a ticket to see a show

At common law, licences..

  • Were easily revocable by the licensor
  • Were not binding on third parties
  • Were clearly personal rather than proprietary interests
  • This has changed to some extent in modern NZ law.
    • Ability to raise estoppel arguments
    • Availability of equitable remedies

Types of Licences

Bare Licences
  • A mere permission to enter, for some person, given gratuitously by the licensor in circumstances where there is no contract, estoppel or trust argument.
  • Subject to revocation by licensor at any time
  • No formalities required - no contract formed.
  • Purely personal, not assignable
  • A bare licence "passeth no interest, nor alters or transfers property in anything, but only makes an action lawful, which without it had been unlawful" - Thomas v Sorrell [1673].
  • 2 Forms
    • Express e.g. purposefully inviting someone onto your property.
    • Implied by law -May need to be distinguished from a mere toleration of minor trespass
      • Common example: where member of the public enters onto land to communicate with landowner.
      • May be implied where there is no signage prohibiting entry and access is not barred.
  • All implied bare licences are purposive; presuppose some genuine and legitimate reason for entry (Shattock v Devlin [1990]).
    • Implied bare licences and police
      • At common law, the implied licence to enter property of the purpose of communicating with occupants applies to police officers, but they have no greater rights than other officials or members of the public…
      • Once they have been given a reasonable time to leave after being asked to do so, the licence is revoked (Tararo v R).
      • Where police pursue someone whom they reasonably suspect to be an offender, who then enters someone else's property, owners or occupants impliedly give a licence to police to pursue the suspect.
Licences coupled with an interest
  • Traditionally recognised at common law where permission to enter land is coupled with the grant of a proprietary interest in the land or chattels. E.g. a right to enter to hunt animals.
  • Category of licence is unnecessary in modern NZ Law better treated as:
    • Inherent aspect of a profit a prendre, where an interest in real property is involved - Granting someone to take something away from someone else's land.
    • A contractual licence, where permission is granted as an aspect of a contractual arrangement to enter to remove personal property.
Contractual Licences
  • Differs from other forms in licences in that it is given for valuable consideration and is therefore part of an enforceable contract.
  • Consideration does not need to be monetary (However it usually is) - nor a periodical payment for use or occupation.
  • The terms of the licence are construed in its contractual context.
Examples of Contractual Licences
  • Agreement for use of a motel unit.
  • Use of car-parking spaces in conjunction with leased property.
  • Use of wall space for display of advertising
  • Enjoyment of land for timeshares units
  • Rights in some retirement villages
  • Builder's contractor's right to enter to perform work.
Licences supported by estoppel
  • Where licensor is precluded by estoppel from revoking or otherwise jeopardising the licence.
  • Estoppel will be recognised to prevent licensor from acting unconscionably by exercising licensor's strict legal rights.
  • Only applicable in regards to contractual licences.

Licences v Leases

  • Leases are a proprietary interest capable of assignment (given to someone else) and binding on third parties in certain circumstances.
  • Licences are purely personal
  • Decisive test is exclusive possession (Fatac Ltd (in liq) v Commissioner of Inland Revenue).
    • Facts of case: Quarry business owned a property part of which was a quarry.
    • In 1991 the business granted a right to operate the quarry to Atlas Ltd for 12 years, renewable for a further 3 years.
    • In 1996, Puhinui entered into an agreement to sell the entire property to Mt Wellington Nurseries, subject to the "licence" to Atlas.
    • If the occupation right that was granted to Atlas was a licence and not a lease, the new owner would need to pay GST.
    • Issue: Was the agreement between Puhinui a licence or a lease?
    • Held: Atlas did not have an exclusive right of occupation or access, and there was no clearly defined area of which it had exclusive use
  • Exclusive Possession - Holding the right to exclude other people from entering the property. For exclusive possession there needs to be a minimum, defined, finite term.

Licences v Easements

  • Easements generally require a closer connection with the land and its use
    • Easement is an interest in land that runs with the land and binds subsequent purchasers.
    • Licence is a personal interest that can not generally be binding on subsequent purchasers.
  • Licences can exist in a wide variety of situations, some of which would not be possible to achieve with an easements.
    • E.g. Licence may give right of occupation, but an easement cannot.

Creation and Determination of Licences

  • No specific formalities required
  • A licence is not a "contract for the disposition of land", so it does not need to follow the formal writing…
  • If acting with authority of the owners, a person with an exclusive licence who has intention to exercise control over land may confer at least a bare licence on a 3rd party.
  • In contrast, a casual visitor acting on her/his own initiative may not grant a licence or sublicence.
Determination
Expiry
  • Express date
    • Where parties have stipulated that the licence will terminate on a given date.
    • No notice is required.
    • Licence ceases to be a defence in any tort action related to acts committed after the expiry date.
  • Implied date
    • Where no date has been set, court may need to impute intention of the parties
    • "Reasonable period" will depend on the facts of the case.
  • Occurrence of certain events
    • Certain events are contrary to the nature of a licence and their occurrence will determine any licence.
    • Licensor alienates their interest.
    • Subject matter of the licence is destroyed
      • E.g. licensees had been given free admission to a show, but the theatre where these shows were held burned down (Scott v Howard (1881) 6 App Cas 295).
    • Death of the licensor (If a revocable licence - licence coupled with an interest).
  • Breach of a condition subsequent
    • Conditions within a contract that have to be maintained for a contract to stay in force. Relevant for contractual licences, where the licence is granted based upon an express or implied condition - e.g. condition for "good behaviour" implied into admission tickets for entertainment."
    • Breach of a condition subsequent renders the licence voidable, not void. Licensor must give notice of their intention to determine the licence in reliance on the breach.
  • Revocation by the licensor
    • Bare Licence
      • May be revoked at any time at the will of the licensor without liability for damages.
      • Decision needs to be communicated to the licensee to be effective. Can be implicit or explicit - implicit may be actions that could be regarded as implying the licence as been revoked e.g. holding the door open and ushering someone out or by threatening trespass.
      • No requirement that the decision to revoke should be "reasonable" or that licensor should observe rules of natural justice.
      • However a licensee is given a "reasonable" time to leave once licence is revoked.
      • Scope in regards to BORA - public spaces. Argument could be raised that revocation of licence for a public place or private ownership but provided to use by public - might need to be "reasonable" - Rights of freedom of association, speech etc. Not directly tested.
    • Licence coupled with an interest
      • This kind of licence is irrevocable
    • Contractual Licence
      • At common law, treated as revocable by licensor, subject to liability for damages measured by price paid for the licence (Wood v Leadbitter).
      • Today in NZ, revocability is determined by the terms of the contract (Half Moon Bay Marina Ltd v Manakau City Council). There may be terms stipulated in contract stating that licence cannot be terminated or revoked etc. Court may determine that licence is not revokable pursuant to terms within the contract.
      • If the licences an express term that gives the licensor right to cancel for breach, ss 244-264 of PLA 2007 must be followed.
        • Notice requirements
        • Effect of cancellation (Is there compensation or remediation that needs to be done)
        • Consideration relevant to a grant of relief (Can the licensee go to court and clear and remedy the breach and continue the validity of the licence)
        • PLA 2007 does not cover situations where it is alleged that the licensor is in breach, only where the licensee is alleged to be in breach.
  • Abandonment
    • Licensee may determine the licence by abandoning it.
    • No formalities required - e.g. invited over to someone else and after a period of time get up and leave.
    • Licensee must behave in a way that justifies licensor's belief that licence has been abandoned (Bone v Bone).

Licences and Estoppel

  • Classical Approach
    • 5 "probanda" (elements) to raise an estoppel argument (Willmott v Barber):
      1. Mistake
      2. Expenditure
      3. Awareness
      4. Knowledge
      5. Encouragement/Silence
  • Today in NZ, courts evaluate estoppel arguments based on a single underlying principle: unconscionability.
    • Broad doctrine of equitable estoppel: ask whether "it would be unconscionable, unfair or unjust" to allow a particular assertion (Westland Savings bank v Hancock).
    • 5 probanda now viewed as guidelines only
    • Where estoppel argument is established, court has considerable scope for flexibility in the remedy.
    • Importance of proportionality: balance between giving effect to party's expectations and tailoring the remedy to compensate for the detriment suffered.
    • Examples:
      • Equitable damages
      • Right to reimbursement supported by a charge/lien on the land
      • Transfer of the fee simple title to Plaintiff
      • Grant of lease
    • Estoppel arguments, in circumstances of particular cases may require the licence to be upgraded to a proprietary interest.