Case law: A party to a contract cannot hold onto 'intangible property' even if owed money when it ends

Owners of intangible property, such as a database, who provide that property to others in order for them to carry out work under a contract can demand its return when the contract ends, even if the other side claims it is owed money under the contractual terms.

A magazine publisher commissioned a specialist company to hold and update its subscriber database, and handed the database over for that purpose. The publisher was not happy with the service and terminated the contract. There was a dispute over fees and the company refused to hand the database back to the publisher until it was paid. In legal terms, it claimed it had a 'possessory lien' over the database – that, because the database had been supplied to it in order for it to carry out its work under the contract, it could retain the database until it was paid.

The Court of Appeal ruled that it could not do this. While a party could have a possessory lien over physical or 'tangible' property (such as materials, plant or machinery) in those circumstances, a database was 'intangible' property and it was not possible for a party to a contract to claim a possessory lien over intangible property.

Operative date

• Now

Recommendations

• Owners of intangible property, such as databases, who provide that property to others in order for them to carry out work under a contract, can demand the return of that property when the contract ends, even if there is a dispute.

Case ref: Your Response Ltd v Datateam Business Media Ltd [2014] EWCA Civ 281