Tenancy or Licence? Security Company Wins Possession Order

The distinction between tenancies and licences to occupy premises is crucial but not always easy to draw. A High Court case where this proved central concerned an agreement by which a security company allowed a man to occupy a vacant office block in order to protect it from the threat of trespassers or vandals.

The block was owned by a local authority that had contracted with the company for the provision of so-called 'guardians' to occupy it on a temporary basis. When the council sought vacant possession with a view to redevelopment, the company asked the relevant guardian to move out. He declined to do so and the company launched proceedings to recover possession.

A judge found that the man had a right to exclusive possession of a single habitable room and various storerooms within the block. However, in granting a possession order against him, the judge considered that his agreement with the company took effect as a licence, rather than an assured shorthold tenancy.

In rejecting the man's challenge to that ruling, the Court noted that the block was not designed as residential accommodation and that the agreement stated in terms that it did not confer a tenancy. He was one of several guardians who occupied the block and the Court found that he did not enjoy exclusive possession of any part of the premises.

Observing that it was not confined to interpreting the agreement in isolation, the Court ruled that the background – including the nature of the property guardian scheme and the terms of the company's contract with the council – was relevant. The agreement was not a sham and the entire commercial purpose of the scheme depended upon guardians enjoying limited rights as licensees. The possession order had been stayed pending the Court's decision, but would now come into effect.