02 July, 2020
On 26 March 2020, the Lord Chancellor and Master of the Rolls published the 117th Practice Direction update to the Civil Procedure Rules, which implemented Practice Direction 51Z. PD 51Z provided for the stay of possession proceedings due to COVID-19.
Last month, the Court of Appeal confirmed the lawfulness of PD 51Z in the case of Arkin v Marshall  EWCA Civ 620.
Mr Marshall secured a mortgage over three adjacent properties at Lodge Farm in Welwyn, Hertfordshire. Mr Arkin was appointed as the receiver for the mortgagees. Mr Arkin asserted that sums due under the loan agreement were in arrears and that Mr Marshall was in breach of a number of terms under that agreement.
In September 2019, Mr Arkin commenced possession proceedings against Mr Marshall and the occupiers of the properties. These proceedings were contested by Mr Marshall and the other occupiers, and so the claims were allocated to the multi-track and transferred to the Central London County Court and a Case Management Conference was listed for 27 March 2020 - the day that PD 51Z came into force.
PD 51Z provided that all proceedings for possession under Part 55 CPR, and all proceedings seeking to enforce an order for possession be stayed for a period of 90 days from the date the practice direction came into force.
Mr Marshall was of the view that this meant that the parties did not have to take any of the case management steps required by the court. Mr Arkin however did not accept that the stay applied to the proceedings, but contended that if they did then they should be lifted.
The court held that the proceedings were stayed and that the mortgagee had no power to lift the stay. Following this decision, Mr Arkin appealed to the Court of Appeal on this issue.
Upon appeal, Mr Arkin argued that in implementing PD 51Z, the Master of the Rolls went beyond his authority and therefore was acting ultra vires (outside his powers), and was in essence unlawful. As a result of this, the Lord Chancellor was added into the proceedings.
In deciding the legality of PD 51Z, the court considered the following questions:
The court found that PD 51Z was a properly authorised pilot scheme which had the potential to be replaced with a more permanent rule if it proved necessary in the future.
Further, the court also found that PD 51Z and the 90 day stay on possession proceedings was not inconsistent with the Coronavirus Act 2020, which provided that 3 months' notice be provided to the tenant before beginning possession proceedings.
It was also confirmed, that during the stay on proceedings, there was no requirement on any party to take any steps in the proceedings during the period of the stay and that the court theoretically had the power to lift the stay if so required.
It is worth noting that on 25 June 2020, the Civil Procedure (Amendment No. 2) (Coronavirus) Rules 2020 came into force. The Rules have the effect of extending the stay imposed by PD 51Z, preventing any possession proceedings from being pursued under CPR 55 until 23 August 2020.
This case confirmed that the stay imposed by PD 51Z is lawful, and although judges have a theoretical power to lift it, it would almost always be wrong in principle to use it.
As a consequence of this decision, any current possession proceedings are effectively put on hold until the stay is lifted. We can assume that, although the decision was held in relation to PD 51Z, it applies to the new Civil Procedure (Amendment No. 2) (Coronavirus) Rules 2020.
In ongoing possession proceedings, parties may choose to comply with case management directions, however they are under no obligation to do so. This will no doubt dishearten some landlords, as tenants refuse to comply with previously defined case management directions to delay possession of the property. However, as it stands at the time of writing 23 August 2020, the stay will be lifted and such actions can recommence. Until that day, it is still worth preparing for the stay to be lifted and considering what documentation may be needed to pursue a successful possession claim.
For more information contact Laura Hallett Lea in our Dispute Resolution department via email or phone on 0333 207 1141. Alternatively send any question through to Forbes Solicitors via our online Contact Form.