Lawbite: property guardian schemes tested

• United Kingdom

• Litigation and dispute management
• Real estate
• Real estate litigation - LawBite

01-02-2022

Global 100 Ltd v Maria Levela  [2021] EWCA Civ 1835

A possession order, that ended occupation of former nursing accommodation under a property guardianship arrangement (an evolving area of law), has been reinstated on the basis that the lower court was wrong to have found that the threshold for defending a claim for possession under CPR 55.8 was a “relatively low one”.

The freeholder, NHS, had contracted with GGM, which was associated with Global 100 Ltd (‘Global’), for the provision of property guardian service.  Property Guardian schemes offer property owners a means of securing premises and minimising business rates liability whilst the premises are empty.

GGM granted a licence to Global which included an interest in the property sufficient to bring a claim for possession against an individual occupant (a ‘guardian’), and the guardians entered into ‘licences’ with Global which specified that the guardians would have no exclusive right to use any part of the property.

When the NHS needed the premises back to house staff, Global served termination notices on the guardians and then issued possession proceeding against them when they refused to leave.

One area of dispute was whether the guardians had been granted exclusive possession, which would give the occupants much stronger rights to remain.  The guardians also argued that the “licences” were shams.

At first instance a possession order was granted on the basis that there were no substantial grounds on which the claim could be defended. That decision was overturned on appeal with the court declaring that the threshold for defending a claim under CPR 55.8 (which allows the court to decide the case at the first hearing) was low. Unless the points pleaded by the defence were unarguable, then the case should not be summarily decided. 

The Court of Appeal allowed the appeal (proceeded against only one of the guardians) finding that the test under CPR 55.8 was the same as that for summary judgment. As such the real question was whether the guardian had shown a real prospect of defending the claim.  On the facts, it found that she had not. The arrangements were not tenancies, crucially the guardians had no exclusive rights to occupy any parts of the property. 

Further, the arrangement was not a sham. There was nothing to indicate that the legal rights and obligations actually created were different from those which the parties intended to create.

 Key points

• labelling a document a ‘licence’ doesn’t override any suggestion of a tenancy.  However, ensuring that the arrangement does not offer the occupier exclusive possession, should offer the property owner some certainty that no tenancy rights have been granted

• sham arrangement require common intention by the parties.  The guardian’s ability to demonstrate that her intention was to obtain a tenancy rather than a licence was not enough and it was essential to also demonstrate that the other party shared that intention