COVID-19: Procedural Updates – (i) Relief From Sanctions and (ii) Part 55 Claims

20.07.2020

The body of procedural case law and practice guidance continues to grow at pace. In this week’s Bulletin Daniel Webb considers a recent High Court case on relief from sanctions where the impact of the COVID-19 weighed heavily in favour of granting relief. Isabel Petrie considers the new COVID-19 Introduction to CPR Part 55 which collates all of the important developments relating to possession proceedings since March 2020, including a recent Court of Appeal refusal to lift the stay, namely TFS Stores Ltd v Designer Retail Outlet (a significant extension of Arkin, which I have personally been able to deploy, to my client’s benefit).

Should you wish to discuss any of these topics, or raise any other queries, do not hesitate to contact either the clerking team (+44 (0)20 7420 9500 or clerks@selbornechambers.co.uk) or any member of Chambers. Please rest assured that Selborne Chambers remains fully operational and very much open for business.

MARK WARWICK QC

 

Relief from sanctions: “unconscionable” to benefit from COVID-19 pandemic

In Stanley v Tower Hamlets LBC [2020] EWHC 1622 (QB), 26 June 2020, unrep. (Julian Knowles J), the High Court has provided a robust addition to the developing body of COVID-19 jurisprudence, holding that a party was not permitted to capitalise upon another’s breaches when they were directly caused by lockdown.

 

The facts

  • This was a claim for damages following a data protection breach (disclosure of medical records) by a local Council
  • On 13 February 2020, before service of proceedings, the Claimant’s solicitor contacted the Council’s Legal Department and asked whether service would be accepted by email. He was told that service had to be by post and that service by email would not be accepted
  • On 23 March 2020, the UK Government put the country into ‘lockdown’. The Coronavirus Act 2020 was passed by the House of Commons without a vote on the same day, and became law on 25 March 2020. Secondary legislation followed, requiring all but essential businesses to close
  • On 25 March 2020, the Claimant’s solicitor posted the Particulars of Claim etc. to the Defendant
  • By 10 April 2020, the Defendant’s deadline for an Acknowledgment of Service had passed
  • On 15 April 2020, the Claimant requested and then obtained judgment in default
  • The Defendant applied to set aside the default judgment and for relief from sanctions, saying that it was unreasonable for the Claimant’s solicitor to effect service by post when he knew the Council’s offices were shut

 

The decision   

  • Julian Knowles J applied the usual CPR r.13.3 test, and on the facts found that the Defendant had a real prospect of successfully defending the claim (r.13.3(1)(a))
  • But even were he wrong on that limb, there was also good reason to set aside the default judgment (r.13.3(1)(b)). That reason was “the unprecedented national health emergency which was unfolding precisely at the time” service was effected by post, when the Claimant’s solicitor “knew or should have known” that the Council’s offices were shut
  • Turning to the discretion to set aside default judgment in accordance with Mitchell/Denton principles, relief was granted having regard to the second and third stages
  • As to those, it was said that the court was “bound to have regard” to CPR PD 51ZA, which provides at paragraph 4 that the court will take into account the impact of the COVID-19 pandemic when considering applications for relief from sanctions
  • Julian Knowles said that the Claimant’s solicitor was “at fault for not checking whether service by post was still possible and feasible

 

Points for practice

  • Unprecedented nature of the COVID-19 pandemic – the judgment has some strident dicta on this, which could potentially be useful to cite where such a context is key to future claims and applications. For example, at [16]: “The coronavirus pandemic is generally recognised to be the greatest peacetime emergency that this country (and indeed, the world) has ever faced”. And at [36]: “It would be unconscionable in my view for the Claimant to benefit from the unprecedented health emergency which prevailed at the end of March (and which is still subsisting today)” (26.6.20).
  • New systems of working – the Claimant alleged that the Council should have had a system in place so that proceedings served by post could have been dealt with timeously. However, the court observed that from 23 March 2020 one of the challenges for business was “establishing technological links and putting in place new systems of working”. The Council was not criticised for not having new systems in place in time, and was noted to have acted quickly once default judgment was entered. However, practitioners should not assume that the same approach would necessarily be taken now, months after lockdown began.
  • Acting fair and reasonably – although the court declined to view the Claimant’s solicitor’s actions as sharp practice, it was found that he had exercised “poor judgment”. Serving only by post after lockdown was not “fair or reasonable”, even when the Council had previously said (pre-lockdown) it would only accept service by post. The Claimant’s solicitor should have checked. Ultimately, this judgment is a reminder that the courts will apply common sense and not permit parties to capitalise unfairly on defaults brought about by circumstances beyond their reasonable control – which should be some reassurance for practitioners in these still uncertain times.

 

CPR Part 55 Commentary Update:

The editors of The White Book 2020: Civil Procedure have published a new COVID-19 Introduction to CPR Part 55. This is currently contained in the Civil Procedure News, July 2020 Issue, published on 10 July 2020 by Thompson Reuters as well as the online version of the White Book. The editors recognise that the speed at which the Coronavirus pandemic has prompted significant statutory amendments and growing body of case law, which has at times outstripped the publication of their supplementary civil procedure updates.

Civil Procedure Vol. 1, Pt 55 now provides new commentary at 55.0.0 to 55.0.0.2 covering the stay imposed by Practice Direction 51Z (“PD51Z”) and CPR r.55.29, the lifting of that stay and the relevant COVID-19 substantive law. It helpfully sets out for litigants a summary of the important developments and case law over the past 4 months and should be considered essential introductory reading for parties either issuing or dealing with Part 55 Claims.

Paragraph 55.0.0 summarises the effect of PD51Z, introduced on 27 March 2020 and superseded by new CPR r.55.29 as of 25 June 2020. In summary:

Paragraph 55.0.1 summarises the state of the authorities concerning lifting the automatic stay. The headline point being: It will only be right to lift the stay in very rare cases and such applications are not to be encouraged.

In Arkin v Marshall [2020] EWCA Civ 620  the Court of Appeal confirmed that, strictly speaking, the court retains a jurisdiction to lift the stay, however this would likely only be exercised in “the most exceptional circumstances”. In obiter, Vos C deprecated any approach that allowed claims or appeals to go forward where a possession claim was part and parcel of the proceedings [33]. Since the Arkin decision the High Court has lifted the stay for the purpose of handing down a reserved judgment in Copeland v Bank of Scotland Plc [2020] EWHC 1441 (QB). However, more recently in TFS Stores Ltd (see above), Vos C expressed his strong disapproval of lifting the stay even for that narrow purpose, se [36]:

“[36] … A stay means what it says. If the proceedings are stayed, nothing can happen in court at all (see Arkin at [51]). The exceptions to the stay are spelt out in paragraph 2A of PD 51Z, and none of them applies to the delivery of a reserved judgment. I repeat for the avoidance of doubt that I have great difficulty in envisaging any circumstances in which it would be appropriate to lift the automatic stay (see Arkin at [42]). Possession proceedings can and will resume once the stay is lifted.”

Paragraph 55.0.2 makes reference to section 81 and Schedule 29 of the Coronavirus act 2020 which alter the usual time periods for notices served variously under the Rent Act 1977 and the Housing Acts 1985, 1988, 1996 and associated regulations. These amendments will cease to have effect on 30 September 2020.

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