Covid-19 stay of possession proceedings may only be lifted in the 'most exceptional circumstances'
Published on 12th May 2020
In an important ruling on the stay of possession proceedings imposed as a result of the coronavirus crisis, the Court of Appeal in Arkin v Marshall has ruled that the stay is theoretically capable of being lifted, but only in very exceptional circumstances.
Practice Direction 51Z (PD51Z ) was made on 26 March 2020 in response to the Covid-19 pandemic and came into force on the following day. PD51Z makes provision to stay possession proceedings brought under Civil Procedure Rules (CPR) 55 and proceedings seeking to enforce an order for possession for a period of 90 days from the date that the direction came into force.
On 20 April 2020 PD51Z was amended to clarify the stay does not apply to a claim against trespassers, applications for interim possession orders or an application for case management directions which are agreed by all parties.
The case concerns two possession claims for a farmhouse and associated buildings brought against the occupiers of the properties by the fixed-charge receiver acting on behalf of the mortgagee. Case management directions had been agreed between the parties and the consent order confirming the steps required to progress the claims to trial was sealed on 27 March 2020. On that date, PD51Z came into force. The parties disagreed as to the effect of the new practice direction. Those advising the Marshalls took the view that the effect of PD51Z was to discharge the parties of the obligation to take any of the steps required by the agreed directions. The receiver did not accept that the stay applied to the proceedings at all, but contended that if it did it could and should be lifted.
The receiver subsequently applied for the stay to be lifted. At first instance, the county court judge held that PD51Z imposed a blanket stay and that he had no discretion to lift the stay using case management powers under CPR Part 3. The receiver was granted permission to appeal and the case was transferred to the Court of Appeal.
The appeal grounds raised various arguments and questions around PD51Z:
- it was made ultra vires;
- it was inconsistent with Sections 81-81 and Schedule 29 of the Coronavirus Act 2020;
- it is inconsistent with Article 6 of the European Convention on Human Rights (ECHR) or the principle of access to justice;
- does it apply to cases allocated to the multitrack where case management directions had been given before it was introduced?
- does the court have jurisdiction to lift the stay imposed? and
- should the judge have lifted the stay in this case?
The Court of Appeal on 11 May 2020, in a strongly worded judgment dismissed the appeal, finding against the appellant on all points and held the practice direction was lawfully made and was not inconsistent with the provisions of the Coronavirus Act 2020, Article 6 ECHR or the principle of access to justice. It held "the short delay to possession litigation enshrined in PD51Z is amply justified by the exceptional circumstances of the coronavirus pandemic….. there is a need to ensure that neither the administration of justice nor the enforcement of possession orders endanger public health by the unnecessary transmission of the virus. PD51Z creates no risk that persons will 'effectively prevented from having access to justice'".
Addressing the power of the courts to lift the stay the Court of Appeal held the amendment introduced on 20 April did not exclude from the stay directions agreed between the parties. It excluded applications for agreed directions and stated: "there is an obvious value in the parties agreeing, and obtaining the court's endorsement of, directions which will take effect on a date or dates post-dating the end of the stay: they will come out of the end of the stay with an already established timetable and avoid a potential rush to make applications immediately the stay is lifted".
The fact that the parties agreed directions before PD51Z came into force did not point towards a lifting of the stay. They were capable of complying with the directions agreed whether or not the stay was lifted although unable to apply to the court to enforce any failure to comply with those directions during the period of the stay.
It was further held that PD51Z imposes a general stay on proceedings of the kind to which it applies, it cannot be read to exclude the operation of CPR 3, and, although a judge retains the theoretical power to lift any stay, "it would almost always be wrong in principle to use it". It did not rule out that the stay imposed by PD51Z might be lifted, but it would occur only in the “most exceptional circumstances", which were not present in this case.
This decision sends a clear message that the courts are unable in all but exceptional circumstances able to show flexibility with regard to lifting the stay imposed by PD51Z. Circumstances may include situations where the stay operates to defeat the express purpose of PD51Z and endanger public health but otherwise the Court of Appeal cautioned that "we have great difficulty in envisaging such a case".
In the days and weeks ahead the legal and practical implications of the judgment will be widely analysed, particularly as questions remain as to the progress and enforcement on default of agreed directions. However, in all but very limited circumstances, residential and commercial possession claims subject to the stay imposed by PD51Z are to remain stayed.