This bulletin addresses yesterday’s Court of Appeal decision in Arkin v Marshall [2020] EWCA Civ 620. The case addresses both the validity and the proper interpretation of new Practice Direction 51Z concerning possession claims. In this bulletin, Francis Ng sets out the background to the case, explains the judgment, and provides some practice points moving forward. The key points are as follows:
- PD51Z is valid and compatible with both the Art 6 right to a fair trial and with the principle of access to justice;
- While PD51Z permits parties to apply for agreed directions, those directions will themselves be subject to the stay; and
- Judges theoretically have a discretion to disapply the stay, but in practice it will almost always be wrong to do so on anything other than exceptional grounds (such as that the stay is endangering public health). Applications based on ‘normal case management reasons’ are strongly deprecated.
Mark Warwick QC
BACKGROUND: PRACTICE DIRECTION 51Z
Our earlier bulletins have already discussed PD51Z and its recent amendments. It is therefore only described here in brief. PD51Z was introduced on 27 March 2020 staying all possession proceedings and proceedings to enforce possession orders by warrant or writ of possession for 90 days (ie until 24 June 2020). Following concerns raised by the Property Bar Association and Property Litigation Association, it was then amended on 18 April 2020 to ‘clarify’ that it did not apply to claims against trespassers within r 55.6 CPR, applications for interim possession orders, or applications for case management directions which were agreed by all of the parties.
THE FACTS OF ARKIN v MARSHALL
Arkin was a possession claim brought by receivers on 24 September 2019. On 18 November 2019 it was allocated to the multi-track and a CCMC was listed to take place on 26 March 2020. Probably due to the pandemic, the hearing never happened but with the parties’ agreement directions were given by HHJ Parfitt on 27 March 2020 (the day of PD51Z) for a trial between October 2020 and January 2021. The directions provided for disclosure to occur during what turned out to be the stay period, with witness statements due for exchange shortly after the end of the stay on 26 June 2020. On the same day as the directions order, PD51Z came into force. The defendants argued that this meant that they no longer needed to comply with the disclosure directions falling due for compliance during the stay period. The claimants disagreed, arguing that the stay did not apply at all.
The matter came before HHJ Parfitt who held that PD51Z did apply and that there was no discretion to disapply it, with the result that the defendants did not need to give disclosure during the stay period. The claimant then appealed and Kerr J ordered that it be transferred to the Court of Appeal. On appeal, the claimants sought to additionally argue that PD51Z was ultra vires. The Lord Chancellor was therefore added as an interested party (effectively representing the Master of the Rolls), and the Housing Law Practitioners Association was permitted to intervene.
DECISION OF THE COURT OF APPEAL
The appeal was brought on 3 grounds:
- PD51Z was said to be ultra vires
- PD51Z was said not to apply to proceedings which had proceeded past allocation stage and been given case management directions
- The court was said to have jurisdiction to lift the stay on a case by case basis
Vires
After deciding that it was permissible to raise the vires of PD51Z for the first time on appeal, Vos C (delivering the judgment of the Court) held that PD51Z was not made ultra vires. It is therefore valid. In particular, it came within r 51.2 CPR as a pilot scheme for assessing new practices and procedures, and it was not incompatible with the Coronavirus Act 2020, Art 6 European Convention on Human Rights, or the principle of access to justice.
Universal application
This issue was not pursued due to the amendment to PD51Z which stated that the stay was not to apply to an application for agreed case management directions.
Discretion
The claimants had two key submissions. The first was that the exemption for agreed case management directions should be extended so that agreed case management directions could be made and also carried out during the stay. The court rejected this submission. The stay does not apply to ‘an application for’ agreed case management directions – the agreed directions themselves remain subject to the stay, though the parties can voluntarily comply with them if they wished.
The second submission was that judges retained a discretion to lift the stay. Vos C accepted that this was correct. However, he held that the purpose of the stay was ‘blanket in character and does not allow for distinctions between cases where the stay may operate more or less harshly on (typically) the claimant. It would be fatally undermined if parties affected by the stay were entitled to rely on their particular circumstances – however special they might be said to be – as the basis on which the stay should be lifted in a particular case.’ The court would therefore ‘strongly deprecate’ applications to lift the stay based on ‘normal case management reasons’ which would be ‘bound to fail’. As to what would suffice, the court held:
‘… while we would not go so far as to say that there could be no circumstances in which it would be proper for a judge to order that the stay imposed by PD 51Z should be lifted in a particular case, we have great difficulty envisaging such a case. The only possible such case canvassed before us was where the stay would operate in such a way as to defeat the purposes of PD51Z and endanger public health…’
and
‘although as a matter of strict jurisdiction a judge retains a theoretical power to lift any stay, it would almost always be wrong in principle to use it. We do not, however, rule out that there might be the most exceptional circumstances in which such a stay could be lifted, in particular if it operated to defeat the expressed purposes of PD 51Z itself.’
Dealing with the appeal, the Court held that the fact that directions had been agreed before the stay did not meet that standard of exceptionality. The appeal was therefore dismissed. They did, however, note that if a party failed to comply with agreed directions, this might be taken into account by the court when it makes revised directions after the stay is lifted. However, no application could be made during the stay to enforce compliance with directions, even if they are agreed directions made under the PD 51Z.
PRACTICE POINTS
PD51Z has now been held to be lawful – subject to any appeal to the Supreme Court it therefore must be applied. The most important points from Arkin moving forward are therefore the Court’s comments on when the stay might be lifted, and what parties are to do in the interim. The answer, it seems, is that the stay will almost never be lifted, and that it is not worth applying for this on ‘normal case management reasons’. It remains to be seen whether extreme prejudice to one of the parties might ever amount to ‘exceptional circumstances’, but given the apparent policy against lifting the stay based on the parties’ circumstances ‘however special’ even this must be doubtful. It may be that the only applications which succeed are those based on danger to public health. Perhaps, for instance, the stay might be lifted if the claimant required possession of the property for use in providing medical or other essential services.
Until the stay is lifted, it seems that not only will possession hearings not be listed, but no case management directions (even agreed ones) will be enforced. This will no doubt be particularly disappointing to claimants faced with uncooperative defendants – in those cases the stay could be true ‘dead’ time in which the case makes no progress at all. It also raises the question as to whether time and money should be spent agreeing directions and applying for the court to bless them if they cannot be enforced. The answer is that if directions can be agreed, they still have some value. CMCs in possession claims are not all being vacated and experience shows that courts still want to give directions if agreed to avoid an enormous backlog of cases at the CMC stage once the stay is lifted. If the parties can agree directions to trial, they may be able to obtain a (post-stay) trial listing, and if the directions are complied with the claim will be significantly expedited. In addition, if the directions are breached the court might take this into account in its directions following the stay, though this will be entirely discretionary. Any breach of agreed directions might also be relevant for costs purposes (though in cases involving impecunious defendants this will be of little practical value).