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Hounslow LBC v Twickenham Garden Developments Ltd [1971] Ch 233

Implied duty not to revoke a contractual licence during the contractual period.

Facts:

The plaintiff council, the London Borough of Hounslow, entered into a contract with the defendant builders for the construction of dwellings. The defendants were given possession of the construction site for four years. The plaintiff’s architect was not satisfied with how work was progressing so the council gave notice to the defendants terminating their employment. The builders declared that the council’s actions were invalid under the contract and carried on with the work in accordance with the contract. The council sought to obtain possession of the site and sued for trespass. 

Issues:

The defendants argued that they had a licence to remain on the land that was independent of the contractual position. They also argued that the contract had not been validly terminated by the plaintiffs as the plaintiffs had not complied with the requirements of natural justice by not giving the defendants an opportunity to be heard.

Held:

The court refused to grant the council relief. The licence was a contractual licence. Following Hurst v Picture Theatres Ltd [1915] 1 KB 1 the court held that in such a contract there is an implied duty by the plaintiff not to revoke the licence while the contractual period is in force. It did not matter that the right to enter the land was only secondary to the contract. Natural justice did not apply to the notice periods under the contract. However, on the facts the plaintiff had not shown that the contract had been validly terminated. 


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