Landlords of properties, both residential and commercial, sometimes decide to appoint property guardians to live in their property – usually at a reduced rate of rent – to be responsible for the overall security of the building. The aim is to prevent criminal damage and deter squatters from taking up residence.

This is something that we may begin to see more of given that rising rents and the impacts of the Coronavirus pandemic are having a detrimental impact on businesses, the high street and even private renters. Working from home flexibility in light of the pandemic is also resulting in businesses permanently adopting new ways of working and calling time on operating from office spaces.

The reality is that it is not unusual to see a property standing empty on any given street.

The recent Court of Appeal case of Global 100 Ltd v Laleva gives us an insight into how exactly the court will make a decision as to the nature of a property guardian’s occupation in the event of a dispute.

The General Position

Usually, an occupant will be deemed to be a licensee occupying a property under the terms of a licence if he or shares occupation of the property and does not have the benefit of exclusive occupation. On the other hand, if an occupant has exclusive occupation of a property, then, the facts begin to suggest that a tenancy is in place instead. The court will however not take exclusive occupation alone as evidence of a tenancy being in place and will have regard to all of the circumstances surrounding the occupation including:

i) any agreed term, and

ii) whether rent is paid

The Facts

A property owner retained the services of a company (GGM) to provide property guardian services. Consequently, GGM granted another company named Global 100 the right to grant temporary and non-exclusive licences to individuals to act as property guardians for a number of properties. Global 100 were also granted sufficient interests in the properties which enabled it to bring possession claims against the elected property guardians if needs be.

Global 100 and the individual property guardian (Laleva) entered into a “temporary licence agreement” intended to govern the Laleva’s occupation.

When a dispute regarding possession of the property arose, Laleva attempted to argue that she had been granted a tenancy. She argued this on the basis that she had been afforded exclusive occupation of a lockable room.

The Court of Appeal considered her argument and concluded that she was not occupying the property under the terms of a tenancy, but instead under a licence as argued by Global 100. The Court specifically gave consideration to the following points:

• The agreement setting out the occupation confirmed that the whole purpose of Laleva’s occupation was to provide property guardian services and, on that basis, it granted non-exclusive occupation of the whole property;
• The agreement made reference to shared occupation of the living space and reserved the right for Global 100 to enter the property;
• And finally in any event, the presence of exclusive possession is not necessarily conclusive (Street v Mountford [1985] AC 809)

The Court also noted that Laleva’s occupation hadn’t arisen on its own – it was a necessary part of her role as property guardian as she could not carry out her duties unless she was in the property.

The Ruling

In this case, the Court of Appeal ruled that the property guardian occupied the property as a licensee. As a result, the licensor (Global 100) was entitled to use the possession procedure set out in Part 55 of the Civil Procedure Rules to repossess the property.

The Court held Laleva’s claims that she had a tenancy had no real prospect of succeeding.

The Court went on to confirm that the reference in CPR 55.8(2) to possession claims being "genuinely disputed on grounds which appear to be substantial" was, in effect, the same as the summary judgment test; the defendant must show a real prospect of success. Laleva had failed to show this.

What does this decision show us?

This recent decision reminds us that the principles set out in Street v Mountford 1985 remain applicable; a degree of exclusive possession alone is not enough to conclude that a tenancy is in place and the intention of the parties and all of the facts surrounding the occupation must also be considered.

It also serves as a reminder to those looking to grant licences or agreements granting occupation to property guardians of the importance of detailing the following within the agreement:

i) the intended purpose of the agreement and the occupation

ii) any agreements relating to sharing occupation of the property

iii) any reserved rights for the grantor to enter the property or parts of it

Finally, the decision provides welcome news to landlords and licensors that summary decisions can be made in possession claims as this provides the opportunity to avoid the delays and costs of a defended trial involving a defence with little or no merit.

Get in touch today...

Contact the author, Jessica Dickinson, today on 01482 324252 or via email: jld@gosschalks.co.uk . You can click or tap here for more information about our property litigation services and the experts in our team.