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Clore v Theatrical Properties Ltd and Westby & Co Ltd [1936] 3 All ER 436

Whether agreement lease or license; whether binding upon third party with notice

Facts

Mr Clore held rights under an assigned written agreement to use refreshment rooms at the front of house at a theatre. The agreement was stated to be between lessor and lessee, and granted Mr Clore’s predecessor exclusive use of the refreshment rooms. The lessor sold the theatre, and Mr Clore sought to argue the agreement was binding upon the new owner as an overriding interest under s70(1)(g) Land Registration Act 1925.

Issues

Mr Clore argued the agreement with the theatre amounted to a lease because the document was stated on its face to be an agreement between lessor and lessee. As such it would bind a third-party purchaser with notice, and was enforceable as against this third party as an overriding interest by virtue of s70(1)(g) Land Registration Act 1925. Further, and in the alternative, Mr Clore argued that even if the court found the agreement to be a license, it would still qualify as an overriding interest which would bind a third party with notice. Theatrical Properties Ltd contended the agreement amounted to a mere license in substance and therefore, would only bind the original contracting parties to the agreement. As there was no privity of contract between the parties, it was non-enforceable.

Held

The agreement between the parties was held to be a contractual license which had not created an estate in land. Whilst the benefit of a contractual license could be assigned to a third party and enforceable against the original licensor, the burden of the contract would not pass with the title. Therefore, the licensee cannot enforce the contract as against a successor in title.


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