CORONAVIRUS LAW: APPEAL ON POSSESSION ISSUES STAYED BY PD51Z: NO SALAMI SLICING OF CASES WHERE A LANDLORD IS SEEKING POSSESSION

In the judgment in TFS Stores Ltd v The Designer Retail Outlet Centres (Mansfield) General Partner Ltd & Ors[2020] EWCA Civ 833 the Court of Appeal (by a majority) stayed a number of appeals, holding that they were possession proceedings as defined by PD 51Z and CPR 55.29.   This judgment also casts doubt on the decision in Copeland v. Bank of Scotland plc [2020] EWHC 1441 (QB) where the stay was lifted to allow judgment to be given.  The Court of Appeal’s approach is that a “stay is a stay”.

“It would send entirely the wrong message if we were to continue to hear an appeal in what must properly be regarded as possession proceedings on the technical ground that a part of the claim is for a declaration as to the law underlying that claim for possession.”

THE CASE

The appeals concerned disputes between a tenant and various landlords. Sir Geoffrey Voz, gave a judgment with which Lady Justice Asplin agreed.

  1. The tenant issued the first action on 3 November 2017 claiming a declaration that the tenancies had not been validly excluded from the protection of the 1954 Act, and an injunction preventing the landlord from taking possession. The landlords counter-claimed for possession in the first action.
  2. The landlords issued the second action on 11 January 2018 claiming a declaration that the tenancies were not protected by the 1954 Act, rather than possession because the terms had not then expired. By the time of the judge’s judgment, however, the terms of three of the four tenancies had expired, and the parties agreed thereafter that there should be orders for possession to give effect to the decision that the judge had made. The landlords’ claim was, however, never formally amended to claim possession.
  3. 7.Arnold LJ granted the appellant tenant in both actions permission to appeal from the judge’s decision on 8 November 2019.

THE APPLICATION FOR A STAY

  1. There are some straightforward starting points.
  2. First, the first action for declarations as to whether or not the two tenancies were excluded from the protection of the 1954 Act and for an injunction to restrain the landlords from taking possession[1] were not, it seems to me, “proceedings for possession brought under CPR Part 55” or “proceedings seeking to enforce an order for possession” within the meaning of paragraph 2 of PD 51Z.
  3. Secondly, the landlords’ counterclaims in the first action were, equally clearly, “proceedings for possession brought under CPR Part 55” within the meaning of paragraph 2 of PD 51Z. Accordingly, at the very least, the counterclaim in the first action and the appeal from the orders for possession made by the judge in the first action are stayed automatically by PD 51Z. I will return to the more difficult question of what impact this has on the hearing of the appeal from the judge’s decision in the first action as a whole.
  4. Thirdly, the landlords’ claim in the second action, as issued, for declarations that the 4 ongoing tenancies were excluded from the protection of the 1954 Act, is clearly not affected by the automatic stay. The claim, as pleaded, was not a proceeding “for possession brought under CPR Part 55” nor was it a proceeding “seeking to enforce an order for possession” within the meaning of paragraph 2 of PD 51Z.
  5. Again, the more difficult question is as to the effect of what happened to the second action after judgment. By that time, the contractual terms of three of the four affected tenancies had come to an end. The judge at [164] invited “the parties to agree a form of order to give effect to this judgment, or so much of an order as they are able”. The parties have referred us to the detail of the exchanges which then occurred. But, in essence, what happened was that the landlords said that, unless the tenant agreed to possession orders, they would apply to amend the claim form and Particulars of Claim in the second action to claim possession in addition to the declarations they had originally sought. The tenant, therefore, agreed to possession orders being made, seeing that it was otherwise inevitable that such an amendment would be allowed.
  6. In these circumstances, there are two contentious questions that arise under the first issue: (a) How does the counterclaim in the first action affect the stay of the appeal in the first action, and (b) How does the inclusion, by consent, of the possession orders in the judge’s Order relating to three of the four properties in the second action affect the stay of the appeal in the second action?
THE EFFECT OF THE COUNTERCLAIM
How does the counterclaim in the first action affect the stay of the appeal in the first action?
    1. As I have said, it was suggested in argument, that, because the claim in the first action did not attract the automatic stay, the tenant’s appeal from the judge’s dismissal of that claim could go ahead. I do not agree.
    2. In my judgment, as soon as the counterclaim for possession was brought by the landlords in the first action, the entire action became “proceedings for possession brought under CPR Part 55” and so were caught by the stay when it was imposed in March 2020. As explained in Okoro at [21]-[27], those words also encompass any appeal from such proceedings. Any other conclusion would defeat the purposes of the stay explained in both Arkin and Okoro.
    3. I accept that, without the counterclaim, the first action was not “brought under CPR Part 55”, but once the counterclaim was initiated, CPR Part 55 was engaged. CPR Part 55.2(1) is in mandatory terms. It provides that “[t]he procedure set out in this Section of this Part must be used where the claim includes – (a) a possession claim brought by a – (i) landlord (or former landlord) …”. The CPR Glossary[2] defines a counterclaim as a “claim brought by a defendant in response to the claimant’s claim, which is included in the same proceedings as the claimant’s claim”. This indicates that the entire first action must have become “proceedings for possession brought under CPR Part 55” when the counterclaim was initiated. CPR Part 20 does not seem to me to cut across this conclusion. All CPR Part 20.3(1) provides is that a counterclaim is to be treated as it were a claim for the purposes of the CPR. Here, the counterclaim for possession attracts all the rigours of CPR Part 55 and PD55A to the first action.
    4. This analysis also fits with the reality of the situation more generally. The tenant started the first action to resolve the legal issue that underlay the question of whether or not it was entitled to remain in possession of the two properties. It was inevitable that the landlords would counterclaim for possession, which was itself the inevitable consequence of their position. This is the case in many types of landlord and tenant dispute. Underlying legal issues need to be resolved, but their determination leads to the conclusion that the landlord either will or will not be entitled to recover possession from the tenant. That is why it would, in my view, be so inappropriate to salami slice the first action in order to allow the appeal against the tenant’s claim to go ahead, whilst acknowledging that the counterclaim for possession and the appeal from it is stayed. If we did that here, it would reduce the efficacy of the blanket stay that the Master of the Rolls and now the legislature has imposed.
    5. I accept that I am disagreeing with Lewison LJ’s view, but it does not seem that he had access to the pleadings and other papers or to the detailed argument that has assisted us.
How does the inclusion, by consent, of the possession orders in the judge’s Order relating to three of the four properties in the second action affect the stay of the appeal in the second action?
    1. In the light of what I have already said, this question answers itself. I do not see how one can have an order for possession, without there having first been proceedings for possession. As I have already pointed out, CPR Part 55 is mandatorily applicable to possession claims brought by landlords. Accordingly, even though the consensual approach encouraged by the judge employed a short cut that abrogated the need for a formal amendment of the landlords’ claim in the second action, the proceedings on which the judge made his Order must properly be regarded as “proceedings for possession brought under CPR Part 55”. The judge could not otherwise properly have made the Order. In addition, the position was confirmed when the tenant appealed against those possession orders. As Okoro makes clear, an appeal from a possession order is still to be regarded as “proceedings for possession brought under CPR Part 55”.
  1. Again, if any other analysis were adopted, there would be a risk that some appeals from possession orders would be excluded from the automatic stay, cutting across the purposes of that stay and engendering uncertainty.
  2. I conclude, therefore that the automatic stay imposed by PD 51Z and now the 2020 Rules operates to stay the appeals in both the first and the second action.
SHOULD THERE BE AN IMMEDIATE HEARING
Issue 2: If the stay only operates on one of, or part of, the appeals before the court, should there be an immediate hearing?
    1. In the light of my decision on issue 1, this issue does not arise. I would, however, emphasise the undesirability of any approach that allows claims or appeals that are part and parcel of possession claims to be continued despite the automatic stay. As Ms Wicks correctly emphasised and, as we said in Arkin at [42], the purpose of the stay “is of its nature blanket in character and does not allow for distinctions between cases where the stay may operate more or less harshly on (typically) the claimant”. At [44], we said that “[t]he blanket stay has been imposed to protect public health and the administration of justice generally” and “[t]he approach of a blanket stay reflects the balance struck …, and makes clear that possession claims are not to be dealt with on a normal case by case basis during the stay”.
    2. I do not think that the Explanatory Statement for the 2020 Rules expresses any different purpose than I have described. It is clear that the policy intention was to extend the stay on possession proceedings, even though that might “act to the detriment of some small businesses”, for example these landlords. It would send entirely the wrong message if we were to continue to hear an appeal in what must properly be regarded as possession proceedings on the technical ground that a part of the claim is for a declaration as to the law underlying that claim for possession.
Issue 3: In any event, should the stay be lifted in whole or in part?
    1. It will already be apparent that I do not think that we should lift the stay. I accept the force of the case management reasons explained so powerfully by Lewison LJ. I accept also that it would have been preferable if the tenant had raised the point much earlier so that the time and expense of preparing for this appeal could have been avoided. It is not, however, for the court to second guess the policy that lies behind either PD 51Z or the 2020 Rules. The blanket stay must be given effect. As we said in Arkin at [42], “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 in envisaging such a case”.
    2. I should mention in passing the decision of Freedman J in Copeland v. Bank of Scotland plc [2020] EWHC 1441 (QB) at [4]-[7], where he lifted the stay for the purposes of delivering a reserved judgment and making consequential orders in a case where it was acknowledged that the automatic stay applied. I do not agree that that was the appropriate course. 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.
Conclusion
  1. We informed the parties at the conclusion of the argument on the stay that we would not proceed with the hearing of the substantive appeal on the ground that the automatic stay operated upon it. This judgment gives my reasons for that decision.
  2. For the reasons I have given, the hearing of the appeal is vacated on the grounds that it is automatically stayed under PD 51Z and the 2020 Rules. It can be re-listed after the stay ends (or before that if the parties agree under paragraph 2A(c) of PD 51Z), and dealt with at that time in the usual course. We did say in the course of the hearing that, if Court of Appeal business allows, it would be desirable (but not imperative) for this constitution to be reconvened to hear the ultimate appeal, since we have already undertaken the necessary preparation.