The recent County Court decision in Camelot Property Management Limited (1) and Camelot Guardian Management Limited (2) v. Greg Roynon is an uncomfortable reminder to landowners of how easy it is to inadvertently grant a tenancy when only a licence was intended. The consequences of getting it wrong can be time consuming and costly.

Background

This case concerned a former care home owned by Bristol City Council. When the property became empty the council engaged the services of Camelot Property Management Limited (CPML) to install residents – known as guardians – in the building to protect against vandalism and unauthorised use.

On 23 January 2014 Camelot Guardian Management Limited (CGML) entered into an agreement with Greg Roynon (the Agreement) allowing Mr Roynon to occupy two rooms in the property and to have shared use of communal living, kitchen and bathroom facilities. The Agreement stated in clear terms that it was a licence and not a tenancy.

In 2016 notice to quit was served on Mr Roynon. He refused to leave and CPML and CGML brought possession proceedings against him.

Bristol County Court had to consider a couple of preliminary issues, of which the most interesting was whether or not Mr Roynon was a licensee or a tenant. The court proved to be no Sir Lancelot riding to the rescue of Camelot.

The decision

When distinguishing a licence from a tenancy the court is required to look at the substance of the arrangement and not merely the label used. A key feature of a tenancy is that the occupier has been given exclusive possession. On the facts the court concluded that Mr Roynon had been granted exclusive possession of two rooms and was, therefore, a tenant of those areas (he was not held to be a tenant of the shared communal facilities).

Although the Agreement laid out a scheme of occupation that, on its face, was consistent with a licence, what actually happened did not correspond with the Agreement. So, for example, the Agreement:

• provided that the guardians would agree among themselves how to share the space. In reality the original allocation of rooms and any subsequent change was discussed and agreed with either CPML or CGML – the other guardians were not involved in this process; and
• stated that it did not give the guardian the right to use any specific room. However, in practice, when viewing the property each guardian picked a room on the basis that it would be "his" or "hers". Further each guardian would be given the keys to his/her chosen room and at some point a sticker was placed on each door setting out the occupier's name. No guardian would have access to another guardian's allocated room(s). Therefore, as between Mr Roynon and the other guardians in the property, Mr Roynon had exclusive occupation of his two rooms.

Having found that, as against his fellow guardians, Mr Roynon had exclusive occupation of his rooms, the court considered whether he also had exclusive occupation as against CPML and CGML. It concluded that he did:

• while the Agreement contained restrictions upon the way in which a guardian could use his/her room (for example, smoking was not permitted and each guardian was prohibited from letting others sleep at the property), those restrictions were a "common feature of tenancies" and were not "incompatible with exclusive possession";
• the fact that CPML/CGML exercised limited rights of entry to inspect, view and/or repair the property was not inconsistent with exclusive possession; and
• the court also took into account that, unlike in previous cases where occupiers were held to be licensees:
  • the Agreement did not enable CPML or CGML to move a guardian from room to room;
  • neither CPML or CGML was fulfilling any overarching statutory duty, the exercise of which could be frustrated by exclusive possession; and
  • neither CPML nor CGML had any permanent staff at the property nor did either of them provide any attendance or services on the guardians in their rooms.

Interestingly, the fact that the Agreement did not contain any express reservation allowing CPML/CGML access to the property for the purposes of inspection was not decisive of the issue. The judge commented: "I accept that where there has been an express reservation, that can be a clue to the existence of a tenancy, the argument being that the need for the express reservation arises due to the fact that exclusive occupation has otherwise been granted and, if there is no express reservation, the tenant could exclude the landlord from the property. However I do not accept that the reverse is true, namely that it follows from the absence of express reservation that a licence has been created." This sits uncomfortably with the High Court decision in Holland v. Oxford City Council [2016] EWHC 2545 (Ch), in which the absence of any reservation appeared to be the decisive feature in the court reaching its conclusion that the relevant arrangement was a licence.

Commentary

While the decision in this case is persuasive rather than binding, it highlights that, no matter how much care is taken when drafting a licence agreement, if the reality on the ground does not reflect what has been agreed there is always the risk that a tenancy has been granted instead. Getting the structural set-up wrong risks the king being kept out of his own castle.