Global 100 Ltd v Laleva (2021) EWCA Civ 1835
There is a hell of a lot packed into one appeal here, so I’ll try to be brief. This was Global 100’s appeal of a first instance appeal (our note here) in which HHJ Luba QC had held that the first instance District Judge had been wrong to decide the possession claim against property guardians and make a possession order at first hearing, as there was a defence which appeared to be substantial and required further evidence and hearing.
CPR 55.8 provides
(1) At the hearing fixed in accordance with rule 55.5(1) or at any adjournment of that hearing, the court may –
(a) decide the claim; or
(b) give case management directions.
(2) Where the claim is genuinely disputed on grounds which appear to be substantial, case management directions given under paragraph (1)(b) will include the allocation of the claim to a track or directions to enable it to be allocated.
The issues on the appeal (and cross appeal), in order:
i) What is the test under CPR 55.8(2) for ‘genuinely disputed on grounds which appear to be substantial’?
ii) Was the District Judge right that the defence raised did not meet that test?
iii) Was Global 100 entitled to a possession order at all?
i) The CPR 55.8(2) test
HHJ Luba QC had found that the threshold ‘must be a relatively low one’. On second appeal, Global argued that the threshold should be higher than that of summary judgment (CPR 24), because of the term ‘genuinely’. Ms Laleva argued the threshold should be lower than summary judgment given that Part 55 did not require a defence to be advanced prior to the first hearing, and by analogy with Akerman-Livingstone v Aster Communities Ltd (2015) UKSC 15, that there would be likely to be disputed facts or assessments that could nnot be dealt with summarily.
The Court of Appeal, in Lewison LJ’s lead judgment, held that the test was the same as that for summary judgment. Noting Lady Hale’s comment at (35) and (36) of Akerman, that:
She agreed with this court that the court can deal with possession claims summarily “without the summary judgment provisions of CPR Part 24 being invoked”. If that is the case (and I respectfully agree that it is) then it is inconceivable that a different test would be applied under CPR Part 55.8 (2) from that applicable to an application under Part 24.
Further, the wording of CPR 55.8(2) found its closest parallel in the wording of rule 10.5 (5) of the Insolvency (England and Wales) Rules 2016, that a court may set aside a statutory demand in bankruptcy if “the debt is disputed on grounds which appear to the court to be substantial”. In Collier v P & M J Wright (Holdings) Ltd (2007) EWCA Civ 1329 that test had been held to be the same as that for summary judgment.
Lord Lewison went on to conclude
In my judgment the test for summary judgment is the same test as that which applies to the required threshold under CPR Part 55.8 (2). Were the test to be a lower test, it would be a waste of resources (both the parties’ resources and the court’s resources) to give directions for trial on the basis of a defence (whether pleaded or not) that would not survive an application for summary judgment. Were it to be a higher test, it is difficult (if not impossible) to formulate it with any precision. The question, then, is whether the defendant has shown a real prospect of success in defending the claim. The principles applicable to an application for summary judgment are well-settled (see for example Easyair Ltd v Opal Telecom Ltd  EWHC 539 (Ch)); and I need not set them out here.
It should be noted that this is where a defence has been filed:
It may be procedurally unfair to decide a case against an occupier who turns up unannounced at a hearing without having filed a defence, but who tells the district judge that there is (or may well be) a substantive defence which he wishes to advance. But that does not tell you much, if anything, about the test to be applied once an occupier has filed a defence.
ii) The defence in this case
There were two main components to the defence presented in this case. a) That the guardians’ licences were in fact tenancies, and b) that Global 100 had no right to possession. We’ll come back to the right to possession under iii) below.
Was the written agreement a licence or a tenancy?
The starting point was Street v Mountford (1985) AC 809:
“Both parties enjoyed freedom to contract or not to contract and both parties exercised that freedom by contracting on the terms set forth in the written agreement and on no other terms. But the consequences in law of the agreement, once concluded, can only be determined by consideration of the effect of the agreement. If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting that they only created a licence.”
But as well as what ws on the page, the Court could consider the circumstances in which the agreement was made, as per AG Securities v Vaughan (1990) 1 AC 417:
“In considering one or more documents for the purpose of deciding whether a tenancy has been created, the court must consider the surrounding circumstances including any relationship between the prospective occupiers, the course of negotiations and the nature and extent of the accommodation and the intended and actual mode of occupation of the accommodation.”
If an agreement conferred on the occupier the right to exclusive possession, for a term at a rent, “then in all likelihood a tenancy has been created”. But that exclusive possession was not the end of the matter. As per Street v Mountford:
“There can be no tenancy unless the occupier enjoys exclusive possession; but an occupier who enjoys exclusive possession is not necessarily a tenant. He may be owner in fee simple, a trespasser, a mortgagee in possession, an object of charity or a service occupier.”
Further, sole use was not the same as exclusive possession, even where (as in this case) the occupier was in sole occupation of a dwelling house for which they paid. E.g. Stewart v Watts (2016) EWCA Civ 1247, an almshouse case (our report). The surrounding circumstances to an agreement included why the occupier had been let into occupation. In Westminster CC v Clarke (1992) 2 AC 288 (a hostel for the homeless), exclusive possession was found to be inconsistent with the purposes for which the Council provided the accommodation.
In the present case the purpose of G100 in allowing Ms Laleva (together with others) into occupation was to provide guardian services to NHS Property Services. It was essential, in order to fulfil that purpose, that G100 should be able to hand back the Property as and when NHS Property Services required it. Those who occupied the various rooms in the Property were chosen by G100. They were not a self-selected group.
Turning to the substantive terms of the agreement, there are a number of points to be made. First, the purpose of the agreement was set out at its inception. It was to enable the provision of guardian services which required Ms Laleva to occupy the designated space in order to perform those services. Second, that was repeated in the preamble to clause 1 and in clause 1.1. Clause 1.3 entitled G100 to alter the location and extent of the living space, which is, in itself, inconsistent with the grant of exclusive possession. That, in turn was reinforced by clause 1.5. Third, clause 4.3 required amicable and peaceful sharing of the property with others selected by G100. Fourth, the description of the rights granted was “non-exclusive occupation” of the whole property, not any particular part of it.
As I have said, the nature of the agreement was the provision of the guardian services. Occupation of the property by Ms Laleva and others was necessary in order for those services to be provided. That is reinforced by clauses 4.1 and 4.2 of the agreement which required Ms Laleva to sleep in the property for at least five nights out of seven; and to ensure that she or at least one other guardian was in the property at any given time. Those obligations were necessary in order to perform the guardian services.
To this extent, the occupation was akin to a service occupation. Even though guardians wre not employees of the guardian firm providing the service to the property owner, this analysis had been followed in Ludgate House Ltd v Ricketts (2020) EWCA Civ 1637 (our note).
In my judgment, on the proper interpretation of Ms Laleva’s 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 has no real prospect of success.
Was the agreement a sham, or was there a real prospect of establishing this?
To establish a sham it was necessary to establish that both parties shared the intention as to the actual purpose of the agreement. While Ms L may well have had the intention of having a tenancy not a licence, there was no prospect of establishing that G100 shared that intention. This was regardless of whether G100 had exercised all its rights under the agreement, or even if it did not intend to do so. The rights still existed.
the very purpose of the arrangement between NHS Property Services 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 Property Services required it. There is no basis on which it could successfully be argued that the arrangement between NHS Property Services and GGM was a sham (even if such an allegation had been pleaded). The inter-company arrangement between GGM and G100 was made in furtherance of that arrangement. Given that it is common ground (expressly admitted in the defence) that the purpose of the agreement between G100 and Ms Laleva was also that she would occupy the Property in order to facilitate the provision of guardian services by G100, the unreality is in the contention that the agreement was a sham, for all the reasons that Butcher J gave.
iii) Was Global 100 entitled to possession?
Ms L, in this appeal, had advanced a rather elegant argument that, as Global 100 was expressly itself a licensee under the agreement with Global Guardian Management, and the property owner, it was estopped from asserting any other rights than those of a licensee, and one not in occupation. A licence did not give a possessory interest in land
a licensee is not entitled to bring a claim in nuisance (which is an interference with the possession of land): Hunter v Canary Wharf (1997) AC 655. Nor can a licensee bring a claim in trespass: Hill v Tupper (1863) 2 H & C 121. If a licensee cannot complain of trespass, it follows that he is not entitled to bring a claim for possession.
To that end Manchester Airport plc v Dutton (2000) 1 QB 133 was either wrongly decided or should be distinguished and limited.
The Court of Appeal did not agree. There was an estoppel in operation, but it was that as between landlord and tenant, which extended to licensor and licensee.
If a person with no interest in land purports to grant another a tenancy of it, that person (if let into possession) is estopped from disputing the grantor’s title. If the grantor subsequently acquires title, then the estoppel is, as the old phrase puts it, “fed”. This means that the landlord by estoppel is treated as if he had always owned the estate out of which the lease could have been granted. The tenant thereupon acquires the interest in the land which the transaction purported to grant him and which, up to that time, rested purely in estoppel.
GGM granted G100 a right to possession for the purpose of bringing claims for possession against guardians to whom it had granted licences. Even if that was not effective as at the date of the inter-company agreement between GGM and G100, GGM subsequently acquired a right to possession granted by NHS Property Services before the date of issue of the claim form. As at the date of the inter-company arrangement, G100 would have been estopped from challenging GGM’s title to grant it that right, and the subsequent grant of that right by NHS Property Services would have fed the estoppel.
And secondly, Ms L was given the right by G100 to occupy the property. It was not open to her to assert that G100 had no right to recover possession. As per Doe d Johnson v Baytup (1835) 3 Ad & El 188
The critical point is that the act of asking permission to come in gives rise to the estoppel. The title (or the lack of it) in the licensor is simply irrelevant.
The fact that there is an estoppel means that, as between claimant and defendant, whether the claimant does or does not have a possessory interest in the land makes no difference. Either way, the defendant is unable to set up an alternative title whether in herself or a third party. That is entirely consistent with the bedrock principle of relativity of title which pervades English land law. (…)
Here Ms Laleva has enjoyed everything that the licence purported to grant her. Having done so, she must now perform her part of the bargain by leaving the Property.
Such an estoppel did not need to be pleaded by Global 100, only the relevant facts. Global 100 was entitled to seek possession under CPR 55. Whether they could do so aginst a pure trespasser was another matter and not this case.
Appeal allowed and cross appeal dismissed.
On CPR 55.8 – the position at a first hearing where a defendant tenant (or indeed licensee) attends and puts forward or indicates an inchoate or potential but undetailed defence, then 55.8(1)(b) should properly come into play – adjournment with case management directions, most likely including a pleaded defence. This has not changed.
However, once a fully pleaded defence has been filed, including if done for first hearing, then 55(8)(2) is potentially at play. Routinely, the defence will ‘appear to be substantial’ – there will be issues of fact and/or law that can not be dealt with summarily. That said, in the wake of this judgment and the effective importation of CPR 24 into Part 55 proceedings, I would anticipate, at least for a while, quite a few more applications or submissions from claimants that the defence did not meet the ‘summary judgment’ threshold and should be dismissed and a possession order made. This is not just a matter for first hearing, but could be done at a subsequent hearing after a defence was filed.
The summary judgment test, at CPR 24.2, is:
24.2 The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if –
(a) it considers that –
(i) that claimant has no real prospect of succeeding on the claim or issue; or
(ii) that defendant has no real prospect of successfully defending the claim or issue; and
(b) there is no other compelling reason why the case or issue should be disposed of at a trial.
On the issue of property guardians, this is a very significant judgment. Camelot Guardian Management Ltd v Khoo (2018) EWHC 2296 (QB) (our report) had established, at least in the context of occupation of a commercial property, that the licence was not a tenancy, but this case was effectively of a residential unit (part of an old nurses’ home, although last used as offices), and in a position where Ms K could argue she did have sole possession, even exclusive occupation, of a particular lockable room. Further, the licence clauses about sharing the whole space, and being moved to another area of the property had not been exercised and it appeared wouldn’t be practicable to exercise.
Nonetheless, in the context of the purpose of the agreement – that Ms K occupy as a guardian, for the purpose of GGM/G100 providing guardian services to the owner, this was held to be a licence.
What is more, the issue of the guardian firm’s entitlement to recover possession from the guardian after termination of the licence, which I know has troubled some District Judges and seen some claims thrown out, was decided for the Guardian Firm – regardless of their lack of interest in the land, their licensee was estopped from denying their right to possession (assuming of course that the termination of the licence and NTQ were all up to legal requirements). So, regardless of whether the Guardian Firm would actually have sufficient interest to bring a possession claim against, say, a pure trespasser who had entered the property, this is simply not a defence that their licensee can raise against them.
That is, for the moment, pretty much game, set and match on property guardian’s rights…