This Thursday the Court of Appeal will decide on the legality of the practice direction by Sir Terence Etherton, the Master of the Rolls, to stay all possession proceedings for 90 days.

On March 27, 2020 Civil Procedure Rules (CPR) Practice Direction 51Z (PD 51Z) came into force, applying a 90 day stay on all possession proceedings brought under CPR Part 55 and all proceedings seeking to enforce an order for possession by a warrant or writ of possession.

Application of stay of proceedings under PD 51Z

The issue of whether the stay under PD 51Z can be lifted has been raised in the case of Arkin (As Fixed Charge Receiver) v Marshall [F00HF362 & F00363] (Central London County Court, 15/4/20). In that case, the Judge decided that PD 51Z imposed a general stay on all claims issued under Part 55, and made it clear that the Court could not exercise its case management powers to vary the rules or practice directions in order to lift that stay

The implications of Arkin

So what were the facts of this case? The claim was for possession proceedings brought under CPR Part 55 in September 24, 2019 in order to enforce mortgage rights. A case and costs management conference (CCMC) was planned to take place on March 26, 2020. The CCMC did not go ahead, but directions were given for a trial window between October 2020 and January 2021.

As explained at the beginning of this article, PD 51Z then came into force on March 27, 2020, which resulted in staying all possession proceedings brought under CPR Part 55 for a period of 90 days (up until June 24, 2020). During that period, the parties were required to carry out disclosure and file their witness statements. The judge established that it was common ground between the parties that a stay would put a halt on the parties complying with directions during the period of the stay. The barrister for the Claimant argued that it “would be a nonsense for the stay to apply to these proceedings” as there was no increased public health risk by the parties complying with the agreed directions.

The judge rejected this submission, quoting the rationale set out in Sec. State for Communities v Bovale Ltd [2009], in which the Court of Appeal reviewed the source of the law relating to practice directions and among other things concluded that the case management powers of judges did not afford them the general power to vary the rules or practice directions.

In concluding that the claims are stayed for 90 days, the judge explained that: “The Proceedings were started as Part 55 claims and accordingly come within the PD 51Z. Bovale requires any court to give effect to the practice direction… this is not a discretion but a requirement arising out of the nature of this particular practice direction”.

What next?

On April 30, 2020 the Court of Appeal is therefore set to hear the appeal in Arkin which is based on the following three grounds of appeal: (i) whether the three month stay of possession proceedings in PD 51Z is unlawful, (ii) whether the stay applies to the requirements to comply with case management directions in all cases, and (iii) whether the stay should be lifted in individual cases. The Court of Appeal’s ruling will therefore have crucial implications for all possession proceedings. We will be publishing a further update in due course.

In a related development, readers will be reminded that on April 23, 2020 the Government announced that it would be passing primary legislation to temporarily ban the use of statutory demands and winding up orders where a company cannot pay its bills owing to the impact of Covid-19, ensuring that they do not fall into deeper financial strain. That same day, the Government also unveiled its plans to pass secondary legislation to provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent. Both sets of provisions were enacted on April 25, 2020. While a judicial review cannot be brought against the primary legislation, there may well be scope to review the proposed secondary legislation in relation to CRAR. Indeed, there appears to be an error in the drafting in relation to CRAR as it does not apply to a situation where either the March or June quarters’ rents are outstanding as noted in our latest blog available here.

For more information of the Government’s proposed measures, please consult our update on tenant protection, available here. For landlord implications, please refer to our blog available here.

For further information on the issues raised in this update, please contact Joanna Osborne or any other member of our Property Litigation team.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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