Court of Appeal provides further guidance for the property guardianship sector
The Court of Appeal (CA) recently handed down a welcomed judgment for property guardianship companies in Global 100 v Laleva  EWCA Civ 1835. The CA clarified that the correct approach for making a summary possession order (i.e. a possession order at the first hearing) in defended claims is the same as that of a summary judgment application: does the defendant have a ‘realistic prospect of success’. The judgment also makes important points concerning property guardianship companies’ legal standing to issue a possession claim and further guidance on the legal nature of the property guardianship model.
The NHS is the freehold owner of a disused health centre in Hammersmith and granted a licence to the claimant, Global 100, which had granted licences to Ms Laleva and other guardians to occupy the building. Global 100 issued possession proceedings against the guardians, including Ms Laleva, as the NHS requested the building back.
At the first possession hearing, the District Judge made an order for possession on the basis that the defendants did not have an ‘arguable defence’. Ms Laleva appealed on the grounds that (1) the claimant did not have sufficient legal standing to bring the proceedings, i.e. it was the wrong party, and it should have been the NHS and (2) that she was a tenant, not licensee, alleging that the licence agreement was a ‘sham’.
HHJ Luba QC allowed her appeal in part and found that the District Judge should not have made a possession order at the first hearing as the tenant/licensee argument appeared to be substantial. The matter needed to go to a full trial for determination. HHJ Luba QC also found that the claimant had sufficient standing by virtue of its agreement with the NHS. Global 100 appealed the decision, and Ms Luba cross-appealed. The main issues of the appeals were:
1. The threshold for deciding whether a claim is ‘genuinely disputed on grounds which appear to be substantial’, CPR 55.8(2) and whether a possession claim could be determined at the first hearing if the guardian raises a tenancy defence; and
2. Whether a guardian company has ‘legal standing’ to bring a claim for possession for a building that it does not own.
The Court of Appeal declined to decide the second point above, as Ms Laleva was estopped from raising it as the NHS had granted the claimant a licence, and the claimant, in turn, granted Ms Laleva a right to occupy. Therefore Ms Laleva was prevented from arguing that the claimant did not have ‘legal standing’ to bring the claim.
The Court of Appeal decision
The Judge, Lewison LJ, held that the ‘test for summary judgment is the same test as that which applies to the required threshold under CPR 55.8(2)’. Therefore, the real question is whether the defendant has shown a real prospect of success in defending the claim at the first hearing. This was the correct approach to take when a defendant had filed a defence before the hearing, but Lewison LJ recognised that there would be situations where it would be procedurally unfair to allow defendants that had not previously filed a defence, to try to rely on this legal position.
When considering the facts of the case, Lewison LJ further held that the defendant did not have any realistic prospect of succeeding on the tenant/licence argument. In particular, he considered the following:
1. The purpose of the agreement was set out at the start, i.e. to enable the provision of guardian services. The claimant allowed Ms Laleva into occupation to provide its guardian services to the NHS;
2. The claimant was entitled to alter the location and extent of the living space, which is, in itself inconsistent with the grant of exclusive possession (the hallmark of a tenancy);
3. The agreement required amicable and peaceful sharing of the property with others;
4. The description of the rights granted was “non-exclusive occupation” of the whole property, not any particular part of it; and
5. The claimant should be able to hand back the property as and when the NHS requires it given the general nature of the property guardianship model.
This is a significant decision and positive development for the property guardianship industry. It clarifies the test under CPR 55.8(2) when a guardian raises a defence at a first hearing and sets a threshold for future defended claims. This decision will further benefit guardian companies as it supports the basis that guardians are licensees and not tenants due to the nature of the agreement and what happens in reality – an argument that was previously only determined at the High Court.
We have decades’ worth of experience advising property guardianship companies with a real passion for the sector to succeed. If you require assistance, please do get in touch with our Property Guardianship team.
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