Tenants granted relief as stay of possession proceedings is extended
As my colleague, Laura Southgate, reported previously, a new practice direction was issued on 20 April under the Civil Procedure Rules (CPR) (PD51Z). The effect of PD51Z was to immediately stay certain possession claims for a period of 90 days, including all claims for forfeiture of commercial premises (no matter what the breach). PD51Z is due to expire on 25 June 2020 and, as a result, the CPR is to be amended to insert a new temporary rule (CPR 55.29) to stay possession and enforcement proceedings by way of writ or warrant until 23 August 2020.
The new rule, which will come into force on 25 June 2020, also provides that:
- A claim may be brought despite the fact that it may be stayed;
- Time will not begin to run for the purposes of proceedings that are stayed by CPR 55.29; and
- It does not apply to the following:
- A claim against trespassers to which CPR 55.6 applies.
- Proceedings under the interim possession order procedure.
- An application for case management directions that are agreed by all parties.
- A claim for injunctive relief.
What does this mean for landlords and tenants?
Commercial tenants continue to be protected because no forfeiture claim can be progressed through the court (even if it does not relate to non-payment of rent or other sums), leaving only peaceable re-entry (for breaches other than non-payment of rent or other sums) as a way to forfeit a commercial lease until at least 23 August 2020.
This is in addition to the new restrictions likely to come into force when the draft Corporate Insolvency and Governance Bill (CIG Bill) is passed by Parliament, which limits the ability of creditors to wind up debtors following the non-payment of a statutory demand (including for the non-payment of rent) issued after 1 March 2020 and before one month after the coming into force of the CIG Bill (the “relevant period”). The CIG Bill also prohibits creditors from presenting a winding up petition during the relevant period unless it has reasonable grounds to believe that the debtor’s inability to pay its debts is not as a result of a financial impact of coronavirus and/or the debtor’s inability to pay its debts would have arisen despite any financial impact of coronavirus. My blog here provides a useful summary of the CIG Bill.