TFS Stores Ltd v The Designer Retail Outlet Centres (Mansfield) General Partner Ltd & Ors

A possession stay under Practice Direction 51Z and CPR rule 55.29 is determined by the substance and procedural character of the proceedings, rather than technical pleading labels alone. Where a possession counterclaim is joined to a declaratory claim, the majority held that the entire action becomes possession proceedings under CPR Part 55. The same applies where possession orders are made by consent after a declaratory claim, even without formal amendment. An appeal from such proceedings is also stayed. The blanket stay should not be divided so that underlying legal issues proceed separately, and ordinary case-management hardship will rarely justify lifting it.

Two conjoined appeals arose from the High Court’s order declaring that six retail tenancies had been contracted out of the security of tenure protections in the Landlord and Tenant Act 1954, and making possession orders in respect of five premises. The tenant’s first action sought declarations and an injunction; the landlords counterclaimed for possession. The landlords’ second action initially sought declarations only, but possession orders were later agreed for three expired tenancies without formal amendment. The tenant appealed the order: [2019] EWHC 1363 (Ch).

Before the substantive appeal, the tenant argued that the appeals were automatically stayed under Practice Direction 51Z. The central issues were whether the stay applied to either action and whether it should be lifted.

1. Disposition. By a majority, the Court of Appeal vacated the hearing of the substantive appeals because both appeals were automatically stayed under Practice Direction 51Z and the amended CPR provisions. The appeals could be re-listed after the stay ended, or earlier under the agreed case-management exception.
2. First action. Sir Geoffrey Vos, with whom Lady Justice Asplin agreed, held that the landlords’ counterclaim for possession made the entire first action proceedings for possession brought under CPR Part 55. The tenant’s declaratory claim and the possession counterclaim were legally and practically interconnected. They could not be severed so that the declaratory appeal proceeded while the possession appeal remained stayed. CPR Part 20.3(1) did not alter that conclusion.
3. Second action. The agreed possession orders meant that, in substance and reality, the proceedings included claims for possession. The absence of a formal amendment did not prevent the proceedings from being treated as possession proceedings. An appeal from a possession order remained within the scope of the stay, applying London Borough of Hackney v Okoro [2020] EWCA Civ 681.
4. Nature of the stay. Applying Arkin v Marshall [2020] EWCA Civ 620, the majority treated the stay as blanket in character. Technical distinctions and ordinary case-management prejudice could not justify continuing a possession appeal. The Chancellor also rejected the approach in Copeland v Bank of Scotland plc [2020] EWHC 1441 (QB) of lifting the stay to deliver a reserved judgment and make consequential orders.
5. Dissent. Lord Justice Arnold considered that Part 55 was a self-contained procedural code and that the counterclaim had been brought under Part 20, not Part 55. He would have held that the first action was not stayed and that the second action was not brought under Part 55. Alternatively, he considered that exceptional circumstances justified lifting any partial stay so that the legal issues could be decided.

• Court of Appeal (Civil Division) The majority vacated the substantive appeal hearing because both appeals were automatically stayed under Practice Direction 51Z and the amended CPR provisions. Lord Justice Arnold dissented on the scope of the stay.
• High Court of Justice, Business and Property Courts HHJ Davis-White QC, sitting as a deputy High Court judge, declared that the tenancies had been lawfully excluded from the security of tenure regime and made possession orders: [2019] EWHC 1363 (Ch).