Property Litigation: Court of Appeal clarify the implications of Practice Direction 51Z

Property Litigation: Court of Appeal clarify the implications of Practice Direction 51Z

Key contact: Jennifer Butcher

Author: William Rees

In response to the Coronavirus pandemic, Practice Direction 51Z (PD 51Z) of the Civil Procedure Rules (CPR) came into force on March 27, 2020. PD 51Z makes provision to stay proceedings for, and to enforce, possession brought pursuant to CPR Part 55 and applies for 90 days. Due to the relatively recent creation of PD 51Z, the new direction has not been subject to judicial interpretation by a senior court until this past week.

In Arkin v Marshall [2020], possession proceedings under CPR 55 were brought by Arkin (A), seeking to enforce mortgage rights. Directions were agreed and incorporated by consent into an order made on the day that PD 51Z came into force. The deadlines for these directions included disclosure and witness statements and fell within the 90 day stay period imposed by PD 51Z.

Frustrated at the impediment to the progression of the case brought about by PD 51Z, in the first instance in the County Court, A challenged the lawfulness of PD 51Z, arguing that the PD 51Z stay should not apply, submitting that there was no increased public health risk by the parties complying with the agreed directions.

The County Court found that the PD 51Z stay proceedings applied to the directions and that the court had no discretion to vary or lift the stay.

PD 51Z was amended in April by paragraph 2A(c) which holds that: the stay does not apply to applications for agreed case management directions. Importantly, the directions for both parties in Arkin were incorporated into a sealed order predating the paragraph 2A(c) amendment.

Arkin appealed to the Court of Appeal citing three grounds:

1. The lawfulness of PD 51Z; and if it is lawful
2. whether the stay applies to the requirements to comply with case management directions in all cases, and
3. whether in individual cases, in the absence of agreement between parties, the stay can be lifted by a court.

The Court of Appeal, dismissing A’s appeal, found the following:

• PD 51Z has a lawful basis, deriving from CPR 51.2 as a pilot scheme
• PD 51Z does not contradict the recent possession provisions in Schedule 29 Coronavirus Act 2020, nor Article 6 of the European Convention on Human Rights (the right to a fair trial).
• Whilst PD51Z is active, no party can enforce case management directions through the court, even when relying on paragraph 2A(c) i.e. directions agreed by the parties. However, importantly the parties can voluntarily take agreed steps whilst the stay applies and also agree (and seek the court’s endorsement to) further steps which will take effect following the end of the stay, thus putting in place an agreed timetable to take effect when the stay is lifted.
• The court will only lift the stay in exceptional circumstances.

The Court of Appeals findings in Arkin emphasise the difficulties parties will have in trying to enforce case management directions whilst PD 51Z remains active. Even those made under the exclusion in paragraph 2A(c). Arkin has clarified that a strict interpretation is to be given to PD 51Z and that there is virtually no wriggle room or discretion to enable parties wishing to exercise their possession rights under CPR 55 to enforce case management directions through the courts. However, as per the paragraph 2A(c) amendment, parties can take voluntary agreed steps to progress cases whilst the stay is in place. Such action is desirable so as to not flood the courts with applications upon the lifting of the stay. Following from this, parties conduct in how they cooperate with each other to progress cases during the stay may also be a relevant factor and uncooperative parties may face penalties down the line.

For more information, please get in touch with our Litigation team.