Extension of the stay on possession proceedings during Coronavirus - Practice Direction 51Z (PD51Z)
Sarah Hamby, 16th June, 2020
The current stay on possession proceedings and enforcement of possession orders, due to expire on 25 June 2020, has been extended to 23 August 2020. It remains to be seen whether the ban on forfeiture for non-payment of rent under section 82 of the Coronavirus Act 2020 will be extended beyond 30 June 2020.
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In March 2020 the government introduced a raft of emergency measures in response to the current coronavirus pandemic, which has had a significant impact upon landlords and tenants of commercial premises. The measures included:
- A 90day stay on existing possession proceedings to 25 June 2020 (PD51Z);
- A 90 day stay on proceedings for enforcement of possession orders to 25 June 2020 (PD51Z);
- A temporary ban on forfeiture for non-payment of rent until 30 June 2020 (s82 Coronavirus Act 2020 (‘CA 2020’);
- A ban on relying on a failure to pay rent during the period 27 March 2020 to 30 June 2020 in order to oppose a lease renewal under the Landlord and Tenant Act 1954 (s82(11) CA 2020);
The aim of those measures was to provide some protection to businesses adversely affected by the pandemic and the forced closure of non-essential businesses.
The measures had the unintended effect of preventing property owners from recovering possession of their empty properties from trespassers. Accordingly, on 20 April 2020 PD51Z was amended to expressly exclude claims against trespassers as in “persons unknown”.
On 10 June 2020 the 90 day stay on possession proceedings and enforcement of possession orders was extended to 23 August 2020. The stay will no longer take effect under PD51Z, instead a new Civil Procedure Rule 55.29 will be effective from 26 June 2020.
Neither the temporary ban on forfeiture for non-payment of rent nor the period of rent arrears for which a landlord cannot oppose a lease renewal under the CA 2020 have been extended, though there is still time yet for the government to do so. It is thought that the government will do so ahead of the June quarter date.
Further protective measures are due to be introduced by the Corporate Insolvency and Governance Bill 2020 to restrict the enforcement of statutory demands made between 1 March 2020 and 30 June 2020 and winding up petitions presented between 27 April 2020 and 30 June 2020 where a company is unable to pays its debts due to the pandemic.
There have already been cases in which the protective measures have been considered or challenged.
Lifting the Stay
In Arkin v Marshall  EWCA Civ 620 the Court of Appeal confirmed that whilst courts have the power to lift the stay under PD51Z, the circumstances in which it would be proper to lift the stay would be limited to the most extreme circumstances. An application to lift the stay is therefore highly unlikely to succeed.
However, the Court held that during the stay parties can voluntarily comply with case management directions or, if appropriate, agree new directions and apply to have them endorsed by the court. Whilst the parties cannot make applications to enforce compliance during the stay, the Court may consider any non-compliance once the stay is ultimately lifted.
Restraint of Winding up Petition
In A Company (Injunction To Restrain Presentation of Petition)  EWHC 1406 (Ch), the Judge was prepared to grant an injunction restraining the presentation of a winding up petition against a company (a high-street retailer) unable to pay its rent because of the pandemic in anticipation of the changes due to be introduced by the Corporate Insolvency and Governance Bill 2020.
This is a constantly developing area of law and further updates will be released in response to those developments . In the meantime, you may find the following related articles useful:
- Commercial landlords banned from aggressive rent collection
- An overview of the corporate insolvency and governance bill 2020
- COVID-19 and recovering possession of commercial premises - a quick guide for landlords
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