19 janvier 2022

Red alert - Winter 2022 – 4 de 6 Publications

Property Guardians: no tenancy, no sham and every right to possession

  • Briefing

Global 100 Limited v Maria Laleva [2021] EWCA Civ 1835


The Court of Appeal has provided further guidance on various issues of possession claims and the lease/licence distinction.

Crucially, it has been held that occupiers must establish that they have a realistic prospect of successfully defending a possession claim to avoid a summary possession order being made against them. Furthermore, even if exclusive possession is enjoyed by the occupier, this alone will not be enough to establish a tenancy as all  the circumstances must be considered, including the purpose of the original agreement with the landowner.

The facts

The NHS own the office building known as 14-16 Stamford Brook Avenue, London. In March 2016 the property was vacant, so the NHS entered into an agreement with an agency that would find individuals to occupy the property as ‘property guardians’. According to the agreement, the purpose of the guardianship would be to secure the building ‘against squatters, vandals and dereliction’. Global 100 Limited (G100) selected Maria Laleva (Ms Laleva) to be one such guardian.

Under the terms of the agreement with the NHS, guardians would be appointed to occupy the property as licensees on a non-exclusive basis, sharing communal amenities. But, each guardian would have a lockable space to live in to ‘create an orderly environment’. The licences would be granted on a weekly basis only, each containing wording confirming that no relationship of landlord and tenant would arise. The written agreement entered into between G100 and Ms Laleva followed these parameters.

After some time the NHS terminated the guardianship agreement. To facilitate the return of the property with vacant possession, G100 was granted a right to possession of the property but only to the extent necessary to enable it to evict the guardians, if required. Ms Laleva refused to vacate, claiming that her licence was in fact an assured shorthold tenancy with all the associated statutory rights. Alternatively, she argued that the arrangements were a sham that should be ignored in favour of the ‘reality’, ie that she lived at the property as a tenant. A point also arose about whether the claim could be decided on a summary basis.

The arguments

After conflicting decisions in the lower Courts, the following points fell to be considered by the Court of Appeal:

  • Was the claim genuinely disputed on grounds which appeared to be substantial? If so, directions would be needed for a full trial under CPR 55.8(2).
  • Was the licence actually a tenancy?
  • Were the arrangements a ‘sham’?
  • Did G100 have sufficient interest in the property to obtain a possession order against Ms Laleva, given that the owner was the NHS?

The decision

The Court found in favour of G100, giving the following reasons for each point:

  • Ms Laleva had no real prospect of defending G100's claim. Consequently, the test at CPR 55.8(2) was satisfied. Helpfully, the Court confirmed that the test was the same as the test for awarding summary judgment. Though the bar for this is high, it is not so high as to preclude determination of the dispute just because a defence has been entered.
  • The licence granted to Ms Laleva was not a tenancy. As well as considering the words on the pages of the licence, the Court also considered the circumstances. Although Ms Laleva arguably had exclusive possession of her room in the property, which she had selected, this was not sufficient to prove a tenancy. In this case, it was particularly important to consider why she had been let into occupation, which was linked to the ability to return vacant possession to the NHS quickly. A comparison could also be drawn with service occupiers, ie. persons who occupy the property as part of their duties or to better perform their duties. Service occupiers are not tenants, so Ms Laleva was a licensee.
  • The licence was not a ‘sham’. In summary, a sham is an arrangement that is intended to give the appearance of creating rights/obligations between the parties that are actually different to the rights/obligations the parties intended to create. This means that there must be a common intention to create the sham. In this case, even if Ms Laleva could establish her intention to obtain a tenancy, this was clearly not G100's intention, since it depended on the terms to obtain possession quickly for the NHS.
  • G100 was entitled to make a claim for an order for possession for two reasons. First, G100 had been lawfully granted the legal right to possession of the property. A mere licensee can claim possession against a squatter as a claimant only needs to prove a better title to the land than the defendant. Even if restrictions applied to G100's rights, they were still enforceable. Secondly, Ms Laleva was stopped from denying G100's title and right to possession, as her interest only came into being by being granted by G100. The Court confirmed the principle that a tenant cannot deny his/her landlord's title applies equally to a licensor and licensee. 

Our comments

This case clarifies some important points of law and will likely help in preventing similar arguments from being used by licensees in the future. It is not uncommon for occupiers to claim that they have tenancies just because they have exclusive possession. While this may be convincing in many cases, it is not determinative by itself. Landowners will also welcome the finding that a summary decision can be made in a possession claim, even if the proceedings are defended. If this was not the case, it would be almost impossible to avoid a full trial in any defended case, however poor the defence.

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