Rachel Baker looks at the Court of Appeal’s decision in Arkin v Marshall and its implications for parties in possession proceedings
Introduction
In recognition of the momentous economic and social difficulties brought about by Covid-19, one of the first measures announced by the government in March 2020 was a “complete ban on evictions and additional protection for renters”. On 26th March the Coronavirus Act 2020 came into force and whilst it imposed on Landlords the requirement to give 3 months’ notice to Tenants, there was no mention of a “complete ban” on repossessions.
The judiciary was quick to step in to plug the gap and an updated Practice Direction (PD51Z) came into effect on 27th March, to the effect that an automatic 90-day stay would be imposed on all possession proceedings including those commenced before 26th March 2020. Even then there was some ambiguity, leading to a revised Practice Direction being issued on 20th April which clarified (amongst other things) that possession proceedings could still be issued and that the automatic stay did not apply to certain cases including those where the parties have agreed case management directions.
As might be expected in such extraordinary circumstances, there remained some uncertainty if not confusion. In particular, the new provisions generated much debate as to when a court might lift the stay.
On 11th May the Court of Appeal gave some clarity in the case of Arkin v Marshall [2020] EWCA Civ 620.
Background
The case related to adjacent properties which had been mortgaged by Mr Marshall. Arrears accrued and repossession was sought (the proceedings were brought by a receiver appointed by the mortgage company). Two sets of possession proceedings were commenced in September 2019, were allocated to the Multi-Track and proceeded along the usual timetable for such cases.
A Case Management Conference was listed for 26th March 2020 (the date that the Act came into force). That hearing was in fact adjourned for unrelated reasons, but the parties agreed directions and sought the court’s approval of them. The intention was that the directions would be put into effect. A judge dealt with the case on the papers and incorporated the parties’ agreed directions into a sealed order on 27th March – the day that PD51Z came into effect.
The agreed directions imposed various obligations upon the parties including disclosure of documents and exchange of witness statements. Upon reading the Practice Direction, the Defendant’s lawyers took the view that the automatic Covid-19 stay discharged them of the requirement to comply with any directions until the stay was lifted. The Claimant’s stance was that the stay didn’t apply but that even if it did, the court had jurisdiction to lift it, if only under its inherent jurisdiction to do so pursuant to CPR r3.1.
On appeal from the first instance Judge’s decision that the stay was effective, the Court of Appeal has now confirmed and clarified the interpretation and application of PD51Z.
The Court’s Decision
The decision can be found here and can be summarised as follows:
- PD51Z (in its revised form) was to the effect that parties were entitled to agree directions and request that the court formalise them in an order. That was not equivalent to lifting the stay but simply meant that the parties would come out of the 90-day stay with an already established timetable which would assist with the prompt progression of the case. (Paras 38 & 43 of the Judgment)
- The court does retain (due to CPR r.3.1) an inherent jurisdiction to both impose and lift stays, but its discretion must be exercised in accordance with PD51Z (Para 42)
- The purpose of PD51Z was to lessen the burden on the courts of having to deal with possession proceedings as well as avoiding the risk to public health that evictions might create. The Practice Direction, by its nature, did not allow for distinctions between cases which might affect parties more or less harshly and its effect would be undermined if parties were entitled to argue for a stay to be lifted because of allegedly “special circumstances” (Para 42)
- As the stay had been imposed to protect both public health and the administration of justice parties should not make applications to lift a stay that are bound to fail. Whilst in theory there might be circumstances in which the stay could be lifted the court could only envisage that occurring if the stay itself might endanger public health. A stay would only be lifted in the most exceptional circumstances (Paras 42, 44 & 46)
- A failure to comply with directions could be raised with the court after the stay is lifted and might be borne in mind by the court when making further orders. However, during the operation of the stay there could be no application to the court to enforce compliance with agreed directions, even if they had been approved by the court during the 90-day period (Para 50)
- Whilst a stay of proceedings means that a party will generally not be required to take steps during the period of the stay it does not follow that a party is not permitted to take steps. Crucially, the effect of the revised Practice Direction was that case management directions can be made by a Judge during the stay if the parties have agreed them and wish them to be approved by a Judge. What is not within the court’s power is to make such directions in the absence of agreement (Paras 51 & 52)
Conclusion
The Court of Appeal has confirmed its support for the procedural rules introduced to try and deal with Covid-19’s effect on public health and the administration of justice. There will be, inevitably, a backlog of cases later on in the year and parties are encouraged to agree as much as they can so that progress is made as efficiently and as quickly as possible once possession cases are no longer subject to the automatic stay. If directions are agreed there is no obligation on parties to comply with them, but a decision to ignore them should not be taken lightly and is likely to be frowned upon by an already overburdened court system doing its best to keep the wheels turning in unprecedented times.
