Mehmet Arkin (as Fixed Charge Receiver of Lodge Farm) v Gary Ronald Marshall
| Jurisdiction | England & Wales |
| Judge | Sir Geoffrey Vos |
| Judgment Date | 11 May 2020 |
| Neutral Citation | [2020] EWCA Civ 620 |
| Date | 11 May 2020 |
| Docket Number | Claims numbered: F00HF362 and F00HF363 |
| Court | Court of Appeal (Civil Division) |
and
and
and
and
[2020] EWCA Civ 620
Sir Geoffrey VOS
(Chancellor of the High Court)
Lord Justice Underhill
(Vice-President of the Court of Appeal (Civil Division))
and
Lady Justice Simler
Claims numbered: F00HF362 and F00HF363
Case No: B2/2020/0620-1
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT CENTRAL LONDON
HH Judge Parfitt
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Philip Rainey QC and Mr Michael Walsh (instructed by Collyer Bristow LLP) for the Appellant
Mr Stephen Knafler QC and Mr Julian Gun Cuninghame (appearing by direct access) for the Respondents
Mr Jonathan Auburn (instructed by the Government Legal Department) for the Interested Party
Mr Martin Westgate QC and Mr Daniel Clarke (instructed by Edwards Duthie Shamash) for the Interveners
Hearing date: 30 th April 2020
Approved Judgment
Sir Geoffrey Vos, Chancellor of the High Court, giving the judgment of the Court:
INTRODUCTION
These two appeals raise issues about the effect of Practice Direction 51Z, “Stay of Possession Proceedings – Coronavirus” (“PD 51Z”), which was made on 26 March 2020 in response to the COVID-19 pandemic and which came into force on the following day, and of the amended version which came into force on 20 April 2020.
It is unnecessary to say much about the details of the underlying claims, which relate to adjacent properties at Lodge Farm in Welwyn, Hertfordshire – the main house, which is occupied by Gary and Kim Marshall; the Cottage, which is occupied by their son Brett; and the Barn, which is said to be unoccupied. All three properties are the subject of a mortgage securing a loan to Gary Marshall. The mortgagees assert that sums due under the loan agreement are in arrears and/or that Gary Marshall is in breach of other terms of the agreement. The Appellant was appointed as receiver by the mortgagees. On 24 September 2019 he commenced two sets of possession proceedings in the Hertford County Court against Gary Marshall in F00HF362 and against his son and persons unknown in F00HF363 under Part 55 of the Civil Procedure Rules (“CPR”). Kim Marshall was later substituted as second defendant to F00HF363. The claims are contested. The nature of the issues can be sufficiently seen from the agreed Case Summaries as follows.
In claim number F00HF362, the issues are:
“1. Does [the Appellant] have a right to possession of the property?
2. Does the [Consumer Credit Act 1974 (“the CCA”)] apply to the loan agreement and, if so, is [the Appellant] a creditor within the meaning of [the CCA]?
3. If the [CCA] does apply to the loan agreement and [the Appellant] is a creditor within the meaning of [the CCA], is the loan agreement unenforceable without a court order for failure to be in the form and content required by s. 60 of the CCA and regulations under that section?
4. If sections 140A to 140C of [the CCA] apply, does the loan agreement give rise to an unfair relationship?
5. Is the loan agreement and/or the legal charge a sham and/or illegal and, if so, what is the effect?”
In claim number F00HF363, the issues are:
“1. Does the Receiver [the Appellant] have the necessary power to bring these proceedings and take possession of the Properties?
2. If so:
(a) Does D1 [Brett Marshall] have a lifetime licence to occupy The Cottage and, if so, does the lifetime licence take priority over the mortgages so that C is not entitled to possession. Was the lifetime licence properly terminated by the letter dated 16 September 2019?
(b) Is D2 [Kim Marshall] in occupation of The Barn and, if she is, does she have a beneficial interest in The Barn which would take priority over the mortgages so that C is not entitled to a possession order?”
The claims were allocated to the multi-track and transferred to the Central London County Court. A case management conference was listed before HHJ Parfitt on 26 March 2020. It did not in fact take place, for reasons into which it is unnecessary to go, but the parties were able to agree directions on that day. Those directions were incorporated in an order sealed by Judge Parfitt on 27 March 2020 — the day that PD 51Z came into force. They required various procedural steps including disclosure by 1 May 2020, inspection by 15 May 2020 and exchange of witness statements by 26 June 2020. The trial window was between 5 October 2020 and 8 January 2021. There was provision for a telephone listing appointment, on a date to be notified to the parties in due course.
PD 51Z was issued, as the 117 th Practice Direction Update, on, as we have said, 26 March 2020. It was made by the Master of the Rolls, with the approval of the Lord Chancellor. It reads:
“This Practice Direction supplements Part 51
1. This practice direction is made under rule 51.2 of the [CPR]. It is intended to assess modifications to the rules and Practice Directions that may be necessary during the Coronavirus pandemic and the need to ensure that the administration of justice, including the enforcement of orders, is carried out so as not to endanger public health. As such it makes provision to stay proceedings for, and to enforce, possession. It ceases to have effect on 30 October 2020.
2. All proceedings for possession brought under CPR Part 55 and all proceedings seeking to enforce an order for possession by a warrant or writ of possession are stayed for a period of 90 days from the date this Direction comes into force.
3. For the avoidance of doubt, claims for injunctive relief are not subject to the stay in paragraph 2”.
It should be noted, because it is fundamental to the issues which follow, that the Practice Direction purports to be made under powers conferred by rule 51.2 of the CPR.
The Respondents took the view that the effect of paragraph 2 of PD 51Z was to discharge the parties of the obligation to take any of the steps required by the agreed directions within the 90-day period, and also that the listing appointment would not occur during that period. The Appellant did not accept that the stay applied to the proceedings at all, but he contended that if it did it could and should be lifted.
By agreement between the parties that issue was determined by Judge Parfitt on the basis of written submissions from counsel – Mr Michael Walsh for the Appellant and Mr Julian Gun Cuninghame for the Respondents. By a clear and succinct judgment handed down on 15 April 2020 he held that the proceedings were stayed and that he had no power to lift the stay. By paragraph 4 of his order he pushed back the dates for the directions that had been agreed to corresponding dates after the lifting of the stay. In particular, he ordered that the telephone listing appointment be listed for the first open date after that date.
This is an appeal against that decision. Normally such an appeal would lie to the High Court, but by an order dated 15 April 2020 Kerr J granted permission to appeal and transferred the appeal to this Court pursuant to CPR Part 52.23.
The Receiver's grounds of appeal read as follows:
“1. Practice Direction 51Z was made ultra vires.
2. Alternatively, the learned judge was wrong to find that [PD 51Z] was intended to apply to all proceedings under Part 55, even if they had proceeded past the stage of being allocated to the multi-track and had been given case management directions.
3. The learned judge was wrong to decide that the court had no power to lift the stay on a case-by-case basis.”
The challenge to the vires of PD 51Z advanced in ground 1 was not raised below and there is an issue whether such a challenge can be raised otherwise than by way of judicial review.
The Lord Chancellor applied for permission to intervene in the appeal. We have granted permission, though in the event it seems to us that he is more properly to be regarded as an interested party because of the challenge to the vires of the PD 51Z. Permission has also been granted to the Housing Law Practitioners Association (“HLPA”) to intervene by way of written submissions.
The Appellant has been represented by Mr Philip Rainey QC, leading Mr Walsh, the Defendants by Mr Stephen Knafler QC, leading Mr Gun Cuninghame, and the Lord Chancellor by Mr Jonathan Auburn. HLPA's written submissions were settled by Mr Martin Westgate QC and Mr Daniel Clarke.
As noted at paragraph 1 above, with effect from 20 April 2020 PD 51Z was amended by the addition of a paragraph 2A, which reads:
“Paragraph 2 does not apply to—
(a) a claim against trespassers to which rule 55.6 applies;
(b) an application for an interim possession order under Section III of Part 55, including the making of such an order, the hearing required by rule 55.25(4), and any application made under rule 55.28(1); or
(c) an application for case management directions which are agreed by all the parties”.
Paragraph 2 was consequentially amended so as to start with the words “subject to paragraph 2A”, and the words “and the fact that a claim to which paragraph 2 applies will be stayed does not preclude the issue of such a claim” were added at the end of paragraph 3.
The issues raised by the grounds of appeal, as developed in the submissions...
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