Case review, by Elizabeth Sam, Conveyancing Paralegal in Real Estate.
Global 100 Limited v Maria Laleva [2021] EWCA Civ 1835
The Court of Appeal has provided further guidance on the distinction of a licence and a lease, confirming that exclusive possession is not necessarily enough to constitute a lease. It was held that a property guardian occupied a property as a licensee, not a tenant, and they allowed the licensor to obtain possession from the guardian. Further, they dismissed arguments that the arrangements between the licensor and guardian was a sham.
BACKGROUND
NHS Property Services Ltd (NHS) owned a property and, in March 2016, it was vacant so it gave Global Guardians Management Ltd (GGM) a licence to manage the property, and find individuals to occupy the property as property guardians, pending its redevelopment. The main purpose of the guardianship was to protect the building from squatters, vandals and dereliction. GGM gave a licence to its sister company Global 100 Limited (G100) which provides guardian services in the UK. G100 then granted licences to guardians (including Ms Laleva) to occupy various rooms at the property on a weekly basis stating that no tenancy was to be created.
In September 2020 the NHS required the property back from GGM for redevelopment, so G100 served Notices to Quit and issued claim for possession on the guardians.
ISSUES
1. As per Civil Procedure Rule 55.8(2), was Ms Laleva’s claim “genuinely disputed on grounds which appeared to be substantial”? (In the first instance, the district judge granted an outright order for possession without directions for a full trial.)
2. Did G100 have sufficient interest (as licensees themselves) in the property to claim possession?
3. Were the arrangements licences or tenancies and were they a sham?
DECISION
- The test at CPR 55.8(2) was satisfied as Ms Laleva had no real prospect of defending G100’s claim. The Court of Appeal confirmed that the test was the same as the test for awarding summary judgement.
- The Court found that Ms Laleva had accepted that G100 granted her the licence to occupy in the first place so she could not then say that G100 did not have the right to claim possession of the property on the principle of estoppel that applies to tenants and landlords. Secondly, G100 was granted the legal right to possession of the property and a licensee can claim possession against a squatter as a claimant only needs to prove better title to the land than the defendant.
- The contract between G100 and Ms Laleva did not grant exclusive possession of the property because exclusive possession is not the same as exclusive occupation therefore the arrangement was not a tenancy, but a licence. For the arrangement to be a sham, both parties must have had the intention to create a sham. Ms Laleva was not able to establish G100’s intention to enter into a tenancy as G100’s intention is clear from the contract.
LESSON LEARNT
The case is helpful in clarifying how the tenancy verses licence arguments can be approached in the future and the tactics that landlords may use in bringing a swift conclusion to possession claims by obtaining a summary possession order in the appropriate circumstances. When considering granting licences, it is important to be clear in the wording used in the written licence to try to avoid arguments or confusion arising in the first place.
The case transcript can be found here.
For more information, please contact Nicola Stewart, Senior Associate in our Real Estate Litigation Team.
