Landlord and tenant – Possession – Licence to occupy – Appellant licensor seeking possession of property from licensees, including respondent, occupying premises as property guardians – Claim brought pursuant to CPR 55 on basis that licensees were trespassers – District judge making possession order – County court reversing decision – Appellant appealing – Whether claim genuinely disputed on grounds appearing substantial –Whether respondent holding tenancy rather than licence – Whether licence was sham – Whether appellant entitled to bring possession claim – Appeal allowed – Cross-appeal dismissed
NHS owned premises at Stamford Brook Centre, 14-16 Stamford Brook Avenue, Hammersmith, London W6. It entered into a written property guardianship arrangement with GGM which was associated with the appellant company. GGM agreed to bring the premises into habitable condition and install individuals as property “guardians”. The arrangements were to run initially for four months, thereafter determinable by four weeks written notice.
GGM granted the appellant a licence under which guardians signed agreements directly with the appellant that was granted a sufficient interest in the properties to bring claims for possession against them.
NHS subsequently required possession of the premises and the appellant gave notice to the guardians, including the respondent. It was accompanied by the statutory particulars required to determine a tenancy or licence of a dwelling. The appellant subsequently issued a claim for possession pursuant to CPR 55 on the footing that the individuals, including the respondent, were trespassers within CPR 55.1(b).
The district judge was not satisfied that there were substantial grounds for defending the claim and made an order for possession. On appeal, the county court held that the threshold for defending a claim under CPR 55.8 on grounds which appeared to be substantial was a relatively low one; unless the defence was unarguable, the case should not be summarily decided: [2021] EW Misc 13 (CC); [2021] PLSCS 153.
The appellant appealed. The respondent cross-appealed, arguing that she held a tenancy rather than a licence, the licence was a sham and, since the appellant did not have a possessory interest, it was not entitled to bring the possession claim.
Held: The appeal was dismissed. The cross-appeal was dismissed.
(1) The test applied by the county court to the required threshold under CPR 55.8(2) was wrong. The correct test was the same as the test for summary judgment; the question was whether the defendant had shown a real prospect of success in defending the claim. The court could deal with possession claims summarily without the summary judgment provisions of CPR 24 being invoked. It was inconceivable that a different test would be applied under CPR 55.8(2) from that applicable under CPR 24.
An appellate court should not interfere with a case management decision unless the decision was plainly wrong as being outside the generous ambit where reasonable decision makers might disagree. However, a decision that a defendant had shown no real prospect of success in defending a claim was not a case management decision. Rather, it was an evaluation of the merits of a potential defence, although an appeal court had to respect the decision of the first instance judge. The question for the appeal court was not whether the first instance judge wrongly exercised a discretion but whether the first instance judge was wrong in their evaluation of the merits of a defence.
(2) The starting point in determining whether the agreement created a licence or a tenancy was Street v Mountford [1985] 1 EGLR 128 which decided that, if the agreement satisfied all the requirements of a tenancy, it produced a tenancy and the parties could not insist that they only created a licence. However, as well as what was written on the page, the court might consider the circumstances in which the agreement was made including the reason why the occupier had been let into occupation. If, as a matter of interpretation, the rights and obligations created by the agreement conferred on the occupier the right to exclusive possession, for a term at a rent, it was likely that a tenancy had been created. However, exclusive possession was not necessarily conclusive and sole use was not the same as exclusive possession.
In the present case the purpose of the appellant allowing the respondent into occupation was to provide guardian services to NHS. It was necessary for the provision of the guardian services that the respondent should occupy the property. On the proper interpretation of agreement, considered in the light of the surrounding circumstances and the purpose of the agreement, the argument that it created a tenancy rather than a licence had no real prospect of success.
(3) For acts or documents to be a “sham,” all the parties thereto had to have a common intention that the acts or documents were not to create the legal rights and obligations which they gave the appearance of creating. It was of considerable importance that the intention had to be a common intention, shared by all the parties to the agreement: Snook v London and West Riding Investments Ltd [1967] 2 QB 786 applied.
The very purpose of the arrangement between NHS and GGM was so that the latter could provide guardian services to the former. It was essential, in order to fulfil that purpose, that GGM should be able to hand back the property as and when NHS required it. The inter-company arrangement between GGM and the appellant was made in furtherance of that arrangement. It could not be said that both the appellant and the respondent intended that their agreement should create a tenancy. The argument that the agreement was a sham had no real prospect of success: Hilditch v Stone [2001] EWCA Civ 63, [2001] STC 214 and at [69]. Camelot Guardian Management Ltd v Khoo [2018] EWHC 2296 (QB) followed.
(4) This was a case in which GGM granted the appellant a right to possession for the purpose of bringing claims for possession against guardians to whom it had granted licences. The agreement had to be interpreted, if possible, to make it effective. It was possible to grant a right of legal possession, in the ordinary sense, with restrictions on what the possessor could do with the right. That was how the agreement had to be interpreted in this case.
The respondent had enjoyed everything that the licence purported to grant her. Having done so, she now had to perform her part of the bargain by leaving the property. Therefore, the appellant was entitled to use the procedure under CPR 55 against the respondent.
Nicholas Grundy QC and Sean Pettit (instructed by Kelly Owen Ltd) appeared for the appellant; Mark Wonnacott QC and Nick Bano (instructed by Edwards Duthie Shamash) appeared for the respondent.
Eileen O’Grady, barrister
