Vauxhall’s £50 Mistake and the Supreme Court’s Relief Ruling
In the early 1960s, Vauxhall bought land near the Manchester Ship Canal to build its Ellesmere Port car plant. Because paving a huge site meant lots of runoff, Vauxhall needed a legal route to send surface water and treated effluent into the canal. On 12 October 1962, it struck a deal: MSCC granted Vauxhall a perpetual licence to build and use a buried “Spillway” (big pipes and a chamber) across MSCC’s narrow strip to the canal, for an annual £50 “rent,” plus upkeep and other covenants. The pipes were built and used continuously thereafter.
Fast-forward: on 12 October 2013, Vauxhall missed the £50 payment. MSCC served notices and, when payment still didn’t arrive, terminated the licence on 10 March 2014 under clause 5. The termination was lawful on its face: the licence said if rent stayed unpaid (or covenants were breached), MSCC could determine the licence by notice. Negotiations for a new, market-rate licence went nowhere, so Vauxhall sued for relief from forfeiture.
Here’s the simple legal puzzle. Equity sometimes steps in to undo harsh forfeitures when the forfeiture clause is really security for another obligation (like paying money), and the defaulting party can make things right. That principle is long-standing, and both sides accepted the “security” point here: the termination power secured the £50 payment. The fight was over jurisdiction—does equity’s relief even reach this kind of right? MSCC argued: “Only proprietary interests in land (like leases) qualify; mere licences don’t.” Vauxhall replied: “Our licence rights are effectively possessory—we built, maintained, controlled, and exclusively used the Spillway—so equity can relieve.”
Why does this matter? Because the licence wasn’t trivial. Lord Briggs framed it starkly: the missed sum was £50, but the annual value of what would be lost by termination exceeded £300,000. Equity exists to prevent “unconscionable abuse of strict legal rights,” but it stays inside principled fences. So the Supreme Court had to draw a line: when (if ever) will equity relieve the loss of licensed use of land?
To find that fence, the Court revisited classic shipping and commercial cases. In The Scaptrade, a time charterer who paid late couldn’t get relief: a time charter gives no proprietary or possessory right in the ship; it’s a services contract the owner can withdraw from when payment is late. Equity doesn’t stretch that far. But where a party holds proprietary or possessory rights, equity may help. This proprietary/possessory boundary runs through later cases too.
So, were Vauxhall’s rights possessory? The Court said yes. The Spillway was underground, engineered and maintained by Vauxhall, and functionally under Vauxhall’s control as part of its drainage system. MSCC had some oversight and rerouting rights, but the day-to-day reality was exclusive, perpetual use by Vauxhall. Even the argument that “on termination Vauxhall must remove its works, so nothing is forfeited” failed: ripping out buried pipes would just yield “useless debris,” not restore the practical right to discharge. In short, the licence conferred possessory control sufficient for equity’s jurisdiction.
Having set the boundary (possessory rights suffice), the Court rejected MSCC’s brighter-line rule (“only proprietary interests”). It reasoned that English law has long relieved forfeiture over chattels and other property on a possessory basis; there’s no principled reason to be stricter with land. The Court also emphasized that “possession” in land isn’t too fuzzy to apply—it’s a workable test (factual control plus intent), and the Court of Appeal had handled it carefully.
Put simply for a young reader: Vauxhall had built and used its own special pipes under MSCC’s strip to send clean water to the canal, and it had been allowed to keep doing that forever for a small yearly fee. When Vauxhall forgot to pay the small fee, MSCC tried to cancel the forever-right. The Supreme Court said courts can step in to stop a cancellation like that if the right looks like real, hands-on control of the place (not just permission) and the cancellation was only meant to make sure the fee gets paid. Vauxhall’s right looked like that, so the court could help.
Finally, the result. The Supreme Court held that equitable relief from forfeiture can apply to possessory rights in land held under a licence; the Spillway rights were indeed possessory; and there was no appeal on the trial judge’s discretion to grant relief. Therefore, the appeal was dismissed. Lady Arden separately agreed and underscored that extending relief to this kind of licence is a measured step that shouldn’t cause unacceptable uncertainty.
Bottom line (the judgment, in natural detail): Equity’s relief against forfeiture isn’t confined to classic property interests like leases. Where a party holds possessory control—here, Vauxhall’s exclusive, perpetual operation of the Spillway built and maintained at its own expense—and a termination clause exists simply as security for paying a modest annual sum, the court has jurisdiction to relieve forfeiture. Because the licensee’s control of the Spillway was real and practical, and because the loss from termination dwarfed the £50 default, the Supreme Court confirmed the availability of relief and left the granted relief undisturbed—appeal dismissed.
