Property Litigation Update: Property Guardian found to have tenancy rights

A decision given on 24 February 2017 highlights the risks for those using property guardians, or indeed allowing any occupation of their premises, of inadvertently allowing tenancy (rather than mere licence) rights to be claimed.

What was the dispute about?

In 2013, Bristol City Council entered into an agreement with Camelot engaging their property guardianship services in relation to an empty elderly persons’ home in Bristol. This agreement envisaged the installation of residents, known as property guardians to provide a measure of security against vandalism and unauthorised occupation for the empty property. In January 2014 Mr Roynon moved into the property as one such guardian.

A notice to quit was served on Mr Roynon on 17 May 2016. Mr Roynon refused to leave and the claimants brought possession proceedings against him on the basis that he was a licensee and therefore his licence had been ended by the notice to quit.

On Friday 24 February 2017, the preliminary issue of whether Mr Roynon was a licensee or an assured shorthold tenant was heard at Bristol County Court.

The leading case of Street v Mountford provides that ‘to constitute a tenancy the occupier must be granted exclusive possession for a fixed or periodic term certain in consideration of a premium or periodical payments’. The only element of these requirements in dispute in this case was whether Mr Roynon had been granted exclusive possession.

What did the Court decide?

HHJ Ambrose held that Mr Roynon had exclusive possession of the two rooms and therefore as a matter of law he occupied those rooms under an assured shorthold tenancy. In his judgment HHJ Ambrose took a three stage approach:

1. The label of the agreement

The agreement entered into by the parties was stated to be a licence.

2. The terms of the agreement

The terms of the agreement clearly purported to create a licence. They did not grant exclusive possession to Mr Roynon of the two rooms. Clause 4 of the agreement provided for the guardian to share the living space with the other guardians, stating that it was for the guardians to decide where each guardian slept, on the proviso that Camelot must be kept informed of any changes.

3. The reality of the occupation

HHJ Ambrose held that the reality of the situation did not reflect the terms of the agreement.

Mr Roynon was shown the property by a representative from Camelot, who gave him the choice of ten vacant rooms and informed him that the remaining facilities would be shared. Mr Roynon was given the keys to the two rooms which he selected. No other guardian had keys to these rooms and no other guardian could enter without Mr Roynon’s permission. Stickers showing the occupier’s name were fixed above the door of each room. Contrary to clause 4 of the agreement, if a guardian wanted to move rooms, this was arranged with Camelot and the other guardians were not involved in this process. Therefore, on the facts, the judge held that it was clear that as far as the other guardians were concerned Mr Roynon clearly had exclusive possession of these two rooms.

The judge then considered the access to and control over the rooms by Camelot’s employees and agents. The claimants argued that provisions contained in the agreement restricting how Mr Roynon could use the room (e.g. limiting the number of guests and prohibiting overnight guests) were incompatible with exclusive possession. HHJ Ambrose rejected this argument. He found that where a landlord expressly reserves the right to move occupiers from room to room as occasion demands, this would be indicative of the occupier not having exclusive possession. In this case, though, a provision to this effect was not included.

The claimants also argued that the absence of express provisions in the agreement allowing Camelot to access the property for the purposes of inspection, maintenance or repair was indicate of a licence arrangement. The court accepted that the inclusion of inspection provisions is indicative of a tenancy, but rejected that the reverse is true. Furthermore, the evidence showed that whilst regular inspections took place they constituted no more than a visual inspection of each room carried out from the doorway, and therefore they were not incompatible with exclusive possession.

The impact of this decision

• This decision was fact specific, and will not fundamentally undermine the property guardian business model, but it does highlight the risk of inadvertently allowing tenancy rights to be established, where adequate protection is not in place to prevent this.
• In order to avoid a purported licence being found to be a tenancy, ensure that neither the agreement nor the realities of the arrangement are consistent with the granting of exclusive possession.
• The judge in this case set out certain specific provisions that could assist in establishing a license, rather than tenancy, relationship, such as a clause reserving the right for the licensor to move occupiers from room to room as occasion demands.

This article was written with the assistance of Sarah Wilson, Trainee Solicitor at Osborne Clarke.