As lenders know, Practice Direction 51Z to Stay Possession Proceedings came into force on 27th March 2020.   Yesterday afternoon (11 May 2020), the Court of Appeal ruled on the Practice Direction in the case Arkin & Others v Marshall [2020] EWCA (Civ) 620, with the Lord Chancellor involved as an Interested Party. 

The Court had no difficulty in concluding: it had jurisdiction (normally an appeal in these circumstances would lie to the High Court, but permission had been granted to go straight to the Court of Appeal); the Practice Direction was properly made; it was not inconsistent with or unlawful because of the Coronavirus Act 2020; and it was not contrary to the European Convention on Human Rights or the principle of access to justice. These aspects are fairly uncontroversial.

The three judges then considered matters of great relevance to lenders facing difficult decisions on specific cases in these unusual times.  Firstly, the Court of Appeal has decided that relevant courts do have power to lift the stay imposed by Practice Direction 51Z.  This is because the Direction does not formally exclude Civil Procedure Rule 3.1.  This aspect of the decision differed from the original judgment (in the Central London County Court) where the judge had decided he had no power to lift the stay.

However, the court went on to suggest that it would be only in the most exceptional cases that courts should consider lifting the stay. This is because the point of the Practice Direction is to secure public health. In the current case, the judge should not have lifted the stay (for what it’s worth, the appellant was a receiver appointed by mortgagees but the general principles set out by the court apply to all cases covered by the Practice Direction).  Not surprisingly, the court also identified that future modifications might be required to the Civil Procedure Rules, after the current Practice Direction expires in June, as the pandemic continues.

Finally, the appeal judges made clear that if any case management directions had been given before the Practice Direction came into force, then while parties could of course comply with the directions (the court used the words “on a voluntary basis during the stay”), the stay imposed meant that non-compliance could not be enforced at this time and parties would have to wait until the end of the stay.

In summary, the key point for lenders is that the appeal court has confirmed it is possible in specific cases to apply to lift the stay imposed by Practice Direction 51Z and seek the permission of the court to proceed.  However, this should only be done in the most exceptional of cases. 

This is consistent with our previous advice on this Practice Direction.  If you would like to discuss further, or to receive a full copy of the judgment, please contact me, Mark Higgins, at mark.higgins@irwinmitchell.com.