GM ‘motors on’ as Manchester Ship Canal Company court battle sinks

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A court has ruled in favour of General Motors (GM) over a case involving drainage rights, which, if it had been successful, would have netted the land owners a windfall payment worth several million pounds.

Back in 1962, the Manchester Ship Canal Company (MSCC) granted GM a ‘licence’ to drain through its land into the canal beyond for a fee of just £4 a month.

Problems arose, however, when GM ceased paying the fees in 2013. Despite the fact that MSCC chased up the overdue payments on a number of occasions, the vehicle manufacturer failed to pay what it owed and so, in 2014, MSCC terminated the 1962 licence citing a breach of contract. GM disputed this and the case ended up in the High Court.

Andrew Skinner, a Partner who specialises in litigation and dispute resolution, said: “Recently judgment was handed down, with the court finding in favour of GM which, for those who have been following the case, came as something of a surprise as the court took an unusual legal route.

“GM was granted ‘forfeiture from relief’ which is usually used on a discretionary basis and has previously only applied to leases, or contracts granting ‘proprietary interests’ or ‘possessory rights’ over land.

“On this occasion, the judge appears to have extended this legal concept and, in effect, has equated a ‘right to drain through land’ with a ‘right to occupy land’.

“Whilst this may appear to make sense because water flowing over or through land ‘occupies’ it, at least on a temporary basis, these rights do not permit the creation of a pond, lake or standing water. The judgment does not appear to have made this distinction and has instead treated the drainage water in a similar way to easements which deal with rights of way to land.

“Although there is no official word yet from MSCC, they may decide to appeal, particularly as revised charges for such drainage rights would no longer be set at the 1962 rate of £4 a month and is probably worth nearer half a million pounds per annum.”

Andrew added: “The lesson from this case, is if you have a rights agreement in place, don’t allow it to lapse. Even though GM won in court, it now faces not only its own legal fees but MSCC’s full legal costs too, which could all have been avoided if they had paid their £4 a month bills on time.”

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