The case of South Lodge Flats Limited v Malik presents a significant judicial examination of the scope and application of Practice Direction PD51Z amidst the COVID-19 pandemic. The appellants, Vaqar and his sons, sought to recover costs and contest possession orders related to a flat in Knightsbridge, owned under a long lease by Iftikhar Malik. The litigation unfolded against the backdrop of procedural challenges exacerbated by pandemic-induced restrictions, leading to pivotal questions about the automatic stay of possession proceedings and the court's discretion in awarding costs.

The England and Wales Court of Appeal ultimately dismissed the appellants' appeal, upholding the initial decision of the county court judge, HHJ Gerald. The core issues revolved around whether PD51Z, which imposed an automatic stay on possession proceedings due to COVID-19, applied to the appellants' case and whether the appellants were entitled to recover costs for the appeal. The Court of Appeal agreed with the lower court's interpretation that PD51Z did not apply to the appellants' claims, a position later broadened in the TFS Stores Ltd v The Designer Retails Outlet Centres (Mansfield) General Partner Ltd judgment. Consequently, the appellants failed to secure a favorable costs order, and their appeal was dismissed.

Precedents Cited

A pivotal precedent in this case was the TFS Stores Ltd v The Designer Retails Outlet Centres (Mansfield) General Partner Ltd [2020] EWCA Civ 833. In TFS Stores, the Court of Appeal adopted a broader interpretation of PD51Z, determining that the stay applied not only to proceedings initiated under CPR Part 55 but also to any possession-related claims or orders, regardless of their procedural origins. This expansive reading influenced the Court of Appeal in South Lodge Flats Limited v Malik to reassess whether PD51Z encompassed the appellants' possession claims.

Legal Reasoning

The court employed a structured approach to evaluate the application for an extension of time under the Denton v TH White Ltd [2014] EWCA Civ 906 three-stage test:

• Assessing the seriousness and significance of the procedural default.
• Determining if there was a good reason for the default.
• Evaluating all circumstances to ensure just treatment of the application.

The appellants failed the first two stages, as the court deemed the procedural default serious and lacking a valid excuse. Furthermore, the decision to dismiss the appeal considering the precedents and the conduct during litigation underscored the court's adherence to procedural integrity, even amidst the exceptional circumstances of the pandemic.

Impact

This judgment reinforces the broader applicability of PD51Z to possession proceedings, aligning with TFS Stores' expansive interpretation. It sets a precedent that even amidst pandemics or similar crises, possession proceedings may not be shielded under automatic stays if they fall within the widened scope of PD51Z. Additionally, the decision underscores the judiciary's discretionary power in awarding costs, emphasizing that the general rule of "costs follow the event" may yield to equitable considerations based on litigant conduct and case circumstances.

Practice Direction PD51Z

PD51Z was introduced in response to the COVID-19 pandemic to temporarily alter court procedures, including imposing automatic stays on certain types of litigation to manage court backlogs and ensure safety. Initially, it was interpreted narrowly to apply to cases under CPR Part 55, which pertains to possession proceedings.

Civil Procedure Rules (CPR) Part 55

CPR Part 55 governs possession claims, particularly concerning residential property. It outlines the procedural steps landlords must follow to regain possession from tenants, including serving notices and obtaining court orders.

Denton Test for Sanctions

Established in Denton v TH White Ltd, the Denton test provides a framework for courts to decide whether to grant relief from sanctions for procedural defaults. The three stages assess the gravity of the default, reasons for the default, and the broader circumstances affecting justice.

Costs Orders

Costs orders determine which party bears the legal expenses of litigation. The general principle is that the unsuccessful party pays the successful party's costs, but courts have discretion to deviate based on conduct, case complexity, and other factors outlined in CPR Part 44.

South Lodge Flats Limited v Malik serves as a critical reference point for understanding the judiciary's stance on procedural defaults and the application scope of PD51Z in possession proceedings. By upholding the broader interpretation from TFS Stores, the Court of Appeal emphasizes the necessity for parties to adhere strictly to procedural timelines, even amid unprecedented challenges like a global pandemic. Furthermore, the case highlights the nuanced exercise of discretion in costs awarding, balancing the principles of cost-following-without-event against equitable considerations of litigant conduct. Legal practitioners must heed these developments to navigate possession claims and appeals effectively, ensuring compliance with procedural mandates and strategic management of litigation costs.