Court of Appeal clarifies rules under the Property Guardianship Model

The Court of Appeal has recently given a landmark decision which provides clarity for both landowners and occupants who operate and reside under the property guardianship model.

What is property guardianship?

A property guardian is someone who agreed to live in a building or part of a building that would otherwise be empty, for the primary purpose of securing and safeguarding the property. This can be advantageous to landowners who wish to secure otherwise unutilised buildings against potential squatters, vandals or even dereliction.

Property guardians do not always hold tenancies, and therefore may not enjoy all the rights of tenants, such as lengthier statutory notice periods. This flexible approach can cause issues when landowners seek to take possession of their land and bring the guardians’ occupation to an end.

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

In this recent case, the NHS entered into an agreement with an agency, Global 100 Limited, to find property guardians to occupy a building in London to prevent it from falling into disrepair. Under the terms of the agreement, guardians would be appointed as licensees to occupy the property on a non-exclusive basis. The guardians would have their own lockable space but would share communal facilities. Their agreements were described as “temporary licence agreements”.

The NHS then sought to terminate the guardianship agreement. Global 100 Limited was granted a limited right to possession of the property to enable them to evict the guardians and return the property to the NHS with vacant possession. When Global 100 tried to begin possession proceedings under Part 55 of the Civil Procedure Rules, one of the guardians, Ms Laleva, refused to vacate the premises, arguing that her licence amounted to an assured shorthold tenancy (AST), or alternatively that it was a sham agreement which had been designed to create the appearance of a personal licence.

Following previous contradictory judgments, the Court of Appeal considered whether a tenancy had been created, whether the agreement was a sham, and whether the claim should be heard at a full trial under the relevant litigation rules which are governed by the Civil Procedure Rules.

The Court of Appeal found in favour of Global 100 Limited. It was held that a tenancy had not been created and that the agreement remained a licence, dismissing Ms Laleva’s arguments, which were said to have no real prospects of success.  Ms Lavela’s right to sole use of part of the premises was not the same as exclusive possession. Neither was the agreement a sham; there was a strong presumption that parties to what appeared to be perfectly proper agreement on their face intended them to be effective and binding. Therefore, Global 100 Limited were entitled to use the possession procedure under Part 55.

Additionally, it was held that a defendant must therefore show that they have a reasonable prospect of success in defending possession proceedings under Part 55 in order to avoid summary judgment.

Analysis

The case clarifies the position on properties handed over to property guardians on licence. Disputes often arise where occupiers of properties claim that their agreement allegedly amount to tenancies since they have exclusive possession. The facts of Global 100 Limited v Maria Laleva show that this is now always arguable in every instance. Moreover, the case indicates that defendants to possession proceedings must have a strong defence to take a matter to a full trial. This will be welcome news for landowners who allow property guardians to occupy their property, who may have otherwise been put off using this model, fearing they may have to fight lengthy (and costly) litigation proceedings on reclaiming possession.

For further advice on property related disputes please contact Shams Rahman or any member of our Property & Trusts Litigation team.

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