National Westminster Bank Plc v Feeney

Under Civil Procedure Rules Practice Direction 51, a final judgment on a distinct claim ends that claim’s status as existing proceedings for transitional stay purposes, even where a counterclaim remains. This prevents a successful claimant’s enforcement rights being affected by inactivity in another claim.

Hearings concerned only with enforcing a possession order do not keep an unrelated counterclaim alive. The counterclaim may still be pursued by applying to lift the stay, when its merits and any delay are relevant.

The bank brought possession proceedings concerning a charged dwellinghouse. The defendants’ defence was struck out, but a misrepresentation counterclaim survived. A possession order was made in March 1999. During the critical transitional year, the defendants made applications under section 36 of the Administration of Justice Act 1970 to suspend the possession warrant, without referring to the counterclaim.

When directions for the counterclaim were later sought, the District Judge held that it was automatically stayed under Practice Direction 51. The Recorder reversed that decision. The appeal concerned whether the possession hearings kept the counterclaim alive and whether the March 1999 order was a final judgment for the purposes of the transitional stay provisions.

Lord Justice Carnwath delivered the leading judgment, and Lord Justice Kennedy agreed. The appeal was allowed, the Recorder’s order was set aside, and the District Judge’s order was restored.

1. Construction of the transitional provisions. Practice Direction 51 applied to proceedings issued before 26 April 1999. Paragraph 19(1) imposed a stay where existing proceedings had not come before a judge during the period from 26 April 1999 to 25 April 2000. Paragraph 19(4) provided that proceedings ceased to be existing proceedings once final judgment had been given.
2. Separate claims within one set of proceedings. Although a claim and counterclaim ordinarily form part of the same proceedings, paragraph 19(4) had to be read as operating on a distinct claim or counterclaim once final judgment had been entered on it. Otherwise, a successful claimant could lose enforcement rights solely because another claim in the same proceedings had remained inactive.
3. Application to the facts. The March 1999 possession order was final judgment on the bank’s claim. The later hearings concerned only suspension and enforcement of the possession warrant. They did not concern the surviving counterclaim and therefore did not prevent the counterclaim from becoming automatically stayed. Kennedy LJ described existing proceedings as proceedings still capable of being effectively litigated and confirmed that Part 51 was concerned with action on the counterclaim, not enforcement applications concerning possession.
4. Effect of the stay. The stay did not extinguish the counterclaim. An application could be made to lift it under paragraph 19(2), with the merits of the claim and any justification for delay relevant to that application. Neo Investments Inc v Cargill International SA [2001] 2 Lloyd’s Rep 33 illustrated that a stale claim might be refused relief. Costs were awarded subject to detailed assessment and were not to be enforced without application to the court.

• Court of Appeal (Civil Division): In [2003] EWCA Civ 950, allowed the bank’s appeal and restored the District Judge’s order.
• Dartford County Court, Mr Recorder Pulman QC: On 6 January 2003, allowed the defendants’ appeal from the District Judge and held that the counterclaim was not automatically stayed.
• Dartford County Court, District Judge Glover: On 6 November 2002, held that the defendants’ counterclaim was automatically stayed under Practice Direction 51.