Global 100 Ltd v Jimenez & Ors (2023) EWCA Civ 1243

This was the Court of Appeal judgment in the latest of Global 100 (and Global Guardians) attempts to get out of properties occupied by guardians being subject to local auhtority licensing requirements, and the consequences of that. It was a second appeal from the Upper Tribunal decision in Global 100 Ltd v Jimenez & Ors (HOUSING – HOUSE IN MULTIPLE OCCUPATION – RENT REPAYMENT ORDER – “property guardians”) (2022) UKUT 50 (LC) (our note) which upheld Rent Repayment Orders for failure to licence. It was also the joined appeal of of the Upper Tribunal decision in Global Guardians Management Ltd & Ors v London Borough of Hounslow & Ors (HOUSING – HOUSE IN MULTIPLE OCCUPATION – CIVIL PENALTY – Housing Act 2004 – whether First or Second Appellant a ‘lessee’ of the HMO – whether a person having control of or a person managing the HMO – meaning of ‘person managing’ and ‘person having control’)(2022) UKUT 259 (LC) (our note) upholding Global being in breach of licensing requirements and the penalties imposed by the council.

We can take this quite briefly, because the Court of Appeal likewise did so in dismissing Global’s appeal.

Global 100 Ltd argued

i) that residential occupation by the property guardians of their living accommodation did not constitute the only use of their living accommodation.
ii) that in the Hounslow case, the UT was wrong to find that Global Guardians had a tenancy of the property.
iii) that in the Hounslow case, the UT was wrong to find that Global Guardians was a ‘person in control’ in that they would receive the rack rent if it was let at a rack rent; and
iv) that in the Hounslow case the UT was wrong to find Global 100 was a person in control because in receipt of the rack rent.

On i) the supposed difference between mere occupation and use, the Court of Appeal was brutally brief

Mr Grundy is right to point out that “use” and “purpose” can, on occasions, be used interchangeably but everything depends on the circumstances. In general terms the use describes what use is being made of the living accommodation, and the purpose is the reason why that use is being made of the living accommodation. In the course of submissions Lord Justice Lewison gave an example of a person who was driving a car, which was the use of the car, but the purpose of driving it was to decide whether to purchase it. The fact that the car was being test driven by a person interested in purchasing it (their purpose) did not alter the use made of the car. Further, section 254(2)(d) focuses on the “use” made by the property guardians of their living accommodation (“their occupation of the living accommodation …”) and not Global Guardians’ purpose in allowing the property guardians to reside in the property.

In this case, on the findings of fact made by the FTT in both cases, it was apparent that the property guardians were using the living accommodation as their main residence. They had no responsibilities as property guardians save to live in the accommodation. The presence of the property guardians in their living accommodation and the property may have deterred persons from entering the property, but it did not convert the use made of the living accommodation. In these circumstances in my judgment the Upper Tribunal was right in both appeals to find that the occupation of the property guardians of the living accommodation constituted the sole use of that living accommodation. I have reached this conclusion without having to rely on the presumption set out in section 260 of the Housing Act 2004. This was because the standard test set out in section 254(1)(a) of the Housing Act 2004 was satisfied in respect of both properties. I would therefore dismiss the first ground of appeal.

On ii) Global Guardian’s tenancy – this partly turned on whether there was an issue estoppel arising from HHJ Luba KC’s decision in Global 100 Ltd v Kyselakova & Ors (2021) EW Misc 13 (CC) (our note) as to whether Global Guardians had a tenancy.

The Court of Appeal did not hesitiate to find that there was no issue estoppel and no reason to overturn the FTT (And UT) findings of a tenancy.

In my judgment there is no issue estoppel which binds Ms Laleva, or any of the other occupiers, on this appeal. This is because first His Honour Judge Luba KC was deciding only whether Ms Laleva had an arguable defence to the claim for possession made by Global 100. Secondly he had not heard evidence and he did not make a decision in the light of the terms of the agreement and the evidence about what had happened at the property, in part because he was sitting on appeal. Thirdly the Court of Appeal had allowed an appeal by Global Guardians against his judgment in Global 100 v Laleva, and it is not possible to identify any specific finding which he made which was necessary to his decision which should bind Ms Laleva and the other occupiers.

Mr Grundy is entitled to refer to the fact that His Honour Judge Luba KC, who has considerable experience in property law, had characterised the agreement between NHS PS and Global Guardians as a licence. The answer to that point is, however, that the FTT took full account of the terms of the agreement, and found that NHS PS had no interest in permitting the property to be used as residential accommodation, their interest was only that the property should not be subject to squatting or be vandalised. The FTT, at paragraph 69 of its judgment, made the same point on the agreement as His Honour Judge Luba KC, saying “the property protection proposal is drafted in language more consistent with a service agreement or licence” but went on to find that “it has all the hallmarks of the grant of an interest in land, namely the grant of exclusive possession for a term at a rent …”. There was not an issue as to the term or rent, and the only issue was whether Global Guardians had exclusive possession. The FTT had found that Global Guardians was, in fact, being granted the exclusive right to exploit the whole of the property, and had therefore been granted exclusive possession of it. There was no misdirection of law, or a failure to consider the terms of the agreement between NHS PS and Global Guardians.

On these findings, and in the light of the decision in Street v Mountford, it is apparent that NHS PS had granted Global Guardians a tenancy of the Stamford Brook property. As is apparent from the judgment of the Court of Appeal in Global 100 v Laleva, Global 100 had then licensed the guardians to occupy the property. I would therefore dismiss this ground of appeal.

On iii) Global Guardians and rack rent – did not have to be decided because as the tenant they were liable as the person managing the property.

On iv) Global 100 as ‘person in control’ by receipt of rack rent

In my judgment the FTT and Upper Tribunal were entitled to find that Global 100 had received the rack-rent for the property. NHS PS had only received £600 per month for letting the property. Global Guardians, with Global 100, arranged for the property to be modified for habitation and then licensed property guardians to live in the property. That generated £15,000 per calendar month. Global 100 was not acting as a charity and was in the business of making money. The property guardians were willing licensees of the living accommodation and Global 100 was a willing licensor. The evidence of the transactions between Global 100 and the property guardians is, at the least, some evidence of the market value of the accommodation and the FTT and Upper Tribunal were entitled to rely on it to find the rack-rent of the property. There was nothing to suggest that anything more could be obtained from letting or licensing the property. In any event, as Global 100 was the only person who could charge the guardians for living in the property, if the property had been let at a rack rent, it would be Global 100 who “would so receive” the rack rent for the purposes of section 263(1) of the Housing Act 2004. I would dismiss this ground of appeal.

Appeal dismissed.

Comment

One hopes this saga is at an end. Properties occupied by guardians are subject to LA licensing requirements, and if breached, the guardian firm can face rent repayment order applications.