Possession Claims: Whether an occupiers’ possession claim succeeds where a licence was granted to them by their own partnership

When a partnership occupying a property under a purported licence enters into administration and a third party wishes to take possession, can a possession claim by trustees of the partnership succeed where the licence has been granted to them by their own partnership?

The background

In Brake and others v Chedington Court Estate Ltd [2022], the claimants, comprising three individuals, were the title owners of a cottage which was held in trust for a partnership. The partnership entered into administration, but the first and second claimants, who were made bankrupt, remained in possession of the cottage to continue the partnership’s business and the cottage’s eventual sale.

Having been evicted from the cottage, the claimants brought a claim seeking delivery up of possession of the property, claiming that they had occupied under a licence granted under the partnership agreement and the eviction had been unlawful. They further claimed that their trustee in bankruptcy and the defendant company had together, and unlawfully, falsely presented the defendant company as the owner of the property’s title.

The decision

The High Court concluded that the claim failed, finding in favour of the defendant company.

During the insolvency of the partnership, the cottage’s paper title was held by the first and second claimants on trust for the partnership. The first and second claimants controlled the access to the cottage and were the only keyholders. However, the cottage was not occupied as the claimants’ residence at the time it was acquired by the defendant company.

On the bankruptcy of the first and second claimants, the legal title of the cottage did not vest in their trustees in bankruptcy as the title was held in trust for the benefit of the partnership rather than for the claimants as beneficiaries. Therefore, although co-owners of the cottage, the first and second claimants had no beneficial interest in it. The purported licence to occupy the cottage was claimed to have been granted by the three individuals as joint owners of the cottage to the first and second claimants; this could not be a valid licence because landowners are unable to grant themselves licence to occupy their own property, and so no licence had ever been granted by the partnership to the claimants.

The first and second claimants had intention to possess and a degree of physical control over the property, but their claim that a licence had been granted failed.

Advice and action for landlords

The Commercial Court’s finding that the licence granted was unlawful ensured that possession of the property could be taken by the defendant company in this case, even where the claimants held paper title to the property.

A licence cannot be granted by a landowner to enter onto, or occupy, his own land and so the licence in this case could not be relied upon by the claimants.