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Solicitors Robin Stewart and Nikki Basin of Anthony Gold consider the case of Global 100 Ltd v Laleva [2021].

When landlords bring possession claims they often try to avoid a court hearing at all – the accelerated possession procedure allows claims based on section 21 notices to be dealt with by judges reviewing documents. But in other claims where there is a court hearing, landlords are keen to get possession quickly (and keep their legal fees down) obtaining a possession order at the first hearing.

The courts do not allocate very much time to a first ‘possession hearing’. Cases can be heard in as little as 5-10 minutes. Rule 55.8 of the Civil Procedure Rules (CPR) sets out the possible outcomes at a hearing – the court may either ‘decide the claim’ or ‘give case management directions’.

In some cases, the result is obvious, and the court can decide the outcome of the claim there and then. However, in more finely balanced cases rule 55.8(2) states:

(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.

In the recent appeal case of Global 100 Ltd v Laleva [2021] EWCA Civ 1835 the Court of Appeal considered what was meant by the phrase “disputed on grounds which appear to be substantial”.

This is a legal test of great significance to landlords and tenants because it sets the threshold for which possession cases should be dealt with quickly, and which ones require closer attention (and higher legal costs).

Background

Global Guardians Management Limited (‘GGM’) is a property guardian company. It had granted a right of occupation to the Defendant, Ms Laleva through its intercompany Global 100 Limited. The Property was owned by NHS Property Services Limited who had entered into a written agreement with the GGM for the provision of guardian services.

Ms Laleva was granted a temporary licence to occupy the Property by Global 100 Limited. However, in September 2020, GGM was given notice terminating its agreement with NHS Property Services Limited.

Global 100 Limited brought a claim against Ms Laleva seeking possession of the Property arguing that her licence had been terminated. Ms Laleva filed a defence to this claim raising a number of issues including a challenge to Global 100 Limited’s right to bring possession proceedings; she argued that Global 100 Limited did not have sufficient interest in the land to bring a possession claim, and that her licence agreement was a sham and that really she was a tenant.  

Ms Laleva’s defence was considered at the first hearing and the District Judge decided that Global 100 did have a sufficient right to bring the possession claim, that there was a licence and that this was not a sham.

Ms Laleva appealed against the possession order and on appeal HHJ Luba QC took a different approach. Judge Luba considered that the threshold in CPR 55(8) for defending a claim was a “relatively low one” and that the district judge was wrong to decide the defence. HHJ Luba considered that “unless the points pleaded by the defence were unarguable, then the case should not be summarily decided”. He considered that this reasoning was supported by the rule in CPR 55.7 which allows the defendant to raise a defence at the hearing if one has not been filed.

Global 100 Limited then appealed that decision to the Court of Appeal.

Global 100 Limited’s Appeal

The Court of Appeal held that this case was not one where CPR 55.7 would apply – as a defence had been filed at the first possession hearing and was considered by the District Judge.

The task falling to the District Judge was to consider whether the defence raised “grounds which appear to be substantial”. Lord Justice Lewison referred to the case of Collier v P & M J Wright (Holdings) Ltd [2007] EWCA Civ 1329, [2018] 1 WLR 643 where the phrase “grounds which appear to the court to be substantial” was considered but in the context of insolvency proceedings.

The Judge, in that case, held that this language set the same threshold as those used by the courts in ‘summary judgment’ applications under Part 24 of the CPR.

Summary judgment is available in an ordinary civil claim where one party can show that the other side has no real prospect of (as applicable) succeeding in or defending the claim.

The Court of Appeal came to a similar conclusion here.

Lord Justice Lewison held that if a lower threshold than the ‘summary judgment’ one was applied then this 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”, and if a higher test was applied then this would be difficult to formulate. The Court considered that the right test was whether the Claimant has shown real prospect in defending the claim. This is the same test that is set out in CPR Part 24.

The Court of Appeal allowed the appeal and held that Global 100 was entitled to a possession order against Ms Laleva, and it was appropriate for the District Judge to make an order at the first hearing.

What does this mean for landlords?

In possession cases where the defendant has filed a defence by the time of the hearing, the court will need to consider whether the defendant has any real prospects of successfully defending the claim. If the defendant does not have any real prospects of defending the claim or issue and there is no other reason why the matter should be dealt with at a trial then a possession order ought to be made.

This does not mean that landlords are always going to get a result at the first hearing.

The Court of Appeal stressed that where a tenant has not yet had time to file a full defence, that can justify an adjournment – after all, it can be difficult for a judge to be sure that a tenant’s defence has no reasonable prospects of success until they have seen what the tenant’s full argument is.

Landlord’s need to be realistic about what issues can and cannot be decided in a short hearing, but if a defence is weak or wrong in law, the result in Global 100 Ltd v Laleva means that landlords still have a chance at getting a possession order at the first hearing.

Thanks to Nikki Basin and Robin Stewart of Anthony Gold Solicitors LLP for this article.



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