Sunday, September 27, 2020
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Industry Updates

Landlords who issued possession proceedings after 27 March 2020 or who had existing possession proceedings which they had issued before then will already be frustrated at the delay they have experienced in trying to obtain an order for possession in the light of the introduction of Practice Direction 51Z of the Civil Procedure Rules.

Originally, the stay was brought in for an initial period of 90 days from 27 March 2020. However, the government has announced a further stay and Practice Direction 51Z has been extended until at least 23 August 2020. Practice Direction 51Z itself will continue to have effect until 30 October 2020, so it is possible that the stay would be extended further even after 23 August 2020.

The amendment to the rules was brought in to make changes that might be necessary during the coronavirus pandemic in accordance with the need to ensure that the administration of justice, including enforcement of orders, is carried out “so as not to endanger public health”. The Housing Secretary, the Right Honourable Robert Jenrick MP, announced “Eviction hearings will not be heard in Court until the end of August so no one will be evicted from their home this summer due to coronavirus.” This is, however, not a guarantee that the government will not extend the stay again.

The public health aspect might carry more weight in residential cases. However, on the commercial side, given that the courts have been operating by telephone and video conference hearings, sceptical commentators might surmise that this has more to do with economics and a wish by the government to support businesses through the pandemic than it does with public health. The majority of high street shops operate under leases and, if they have had to close because of the pandemic and cannot therefore pay their rent, many landlords might have taken the decision to have repossessed premises by obtaining a possession order and an order for payment of arrears of rent. Now that shops can trade again, those that have chosen to reopen will at least have a chance to make some rent payments and perhaps find favour with their landlords again. Even possession claims which do not relate to non-payment of rent or other money cannot progress at the moment.

Any new possession proceedings which are sent to the court will be issued but stayed and will not proceed until after the stay has expired in at least August 2020.

Ghost storeThe stay includes all possession proceedings, both commercial and residential. It also applies whether or not the reason for the tenant not being able to pay rent has been the coronavirus pandemic (for example, shops closing or people being unable to work and therefore pay the rent on their homes, shops or offices).

PD 51Z does not exclude the operation of CPR 3.1. Therefore the courts retain the power to lift the stay which it imposes. However, the proper exercise of that power depends on the nature of the stay and the purposes for which it was imposed. Those purposes were to reduce the caseload of the court and to avoid the risk to public health arising out of evictions. This does not allow for distinctions to aid between cases. The purpose of the stay would be “fatally

undermined” if parties affected by the stay were entitled to rely on their particular circumstances as a basis on which the stay should be lifted.

The court has made it clear (Arkin – v- Marshall & another [2020] EWCA Civ 620) that it would strongly disapprove of such applications and that, in almost all cases, the stay in possession proceedings under PD51Z is to be upheld other than in “exceptional circumstances”. The court stated that there “might be exceptional circumstances in which a stay could be lifted, in particular if it operated to defeat the express purposes of PD51Z itself.” Each case will need to be assessed separately to determine whether it would fall within these “exceptional circumstances”.

Enforcement proceedings by way of a writ or warrant are also stayed until 23 August 2020. Time will not begin to run for the purposes of proceedings that are stayed by CPR55.29.

As far as trespassers are concerned, a claim against trespassers to which CPR55.6 applies will not be subject to the stay. Nor will proceedings under the interim possession order procedure, an agreed application for case management directions or a claim for an injunction. The only way for a landlord to recover possession at the moment is peaceable re-entry (for breaches other than non-payment of rent or other sums).

If parliament passes the draft Corporate Insolvency and Governments Bill (“CIG Bill”), it is likely that this will limit the ability of a creditor to wind up a debtor. In particular, this will be true in the case of an unsatisfied statutory demand (including the non-payment of rent) issued after 01 March 2020 and before one month after the coming into force of the CIG Bill or presenting a winding up petition during that period. The exception will be where it has reasonable grounds to believe that the debtor’s inability to pay its debts are not as a result of the financial impact of coronavirus and/or the debtor’s inability to pay its debts that have arisen despite the financial impact of coronavirus.

Courts may consider applications on paper in order to obviate hearings in person.

Landlords are required to serve three months’ notice on all tenants and in all circumstances in relation to the following types of tenancy:

· Assured tenancies (notice under Section 8 of the Housing Act 1988);

· Assured shorthold tenancies (notice under Section 21 of the Housing Act 1988);

· Secured tenancies (notice under Section 83 of the Housing Act 1985);

· Rent Act 1977 protected or statutory tenancies;

· Introductory tenancies;

· Flexible tenancies; and

· Demoted tenancies.

Landlords should take care to serve the statutory prescribed forms when serving notices for possession.

Landlords are also currently restricted under the Coronavirus Act 2020 from serving notices to terminate certain types of residential types of tenancies until 30 September 2020. Again, there is a provision in the legislation for this date to be extended beyond that date.

These notice provisions do not apply to tenants who have lost their security of tenure, tenancies granted in the course of employment, licences or contractual tenancies.

There is concern at the flood of litigation that may ensue after 23 August 2020. Such hearings used to take place in block listings with a number of cases being listed for the same time – often 10:30am or 2pm. It is likely that the hearings will take place remotely either by telephone or video conference and there is likely to be a backlog of cases when the courts do resume hearings. A working group has been set up to consider practical issues arising out of this before the stay is lifted.

This information is correct at today’s date. This article is not intended to give legal advice on a specific case.

Please contact Jill Thomas if you have any queries.

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