Is it legally enforceable?
The guidance is non-statutory and is not binding on business. However, businesses should be aware that there might be reputational consequences if they do not follow the guidance; we have already seen in the context of taking advantage of furlough funding that not being in breach of the law is no protection against negative publicity. Further to the extent a contract expressly requires parties to act reasonably, it could be expected that this guidance is one of the factors a court would consider in determining what is reasonable.
Related FAQs
An amendment to the Civil Procedure Rules’ Practice Directions has been approved by the Master of the Rolls and the Lord Chancellor on 1 April 2020, and is now Practice Direction 51ZA. This has the effect of allowing the parties to extend by prior written agreement up to a maximum of 56 days (rather than the usual 28 days detailed at CPR 3.8(4)) any rule, practice direction or order provided that any extension does not put at risk any hearing date. This Practice Direction will cease to have effect on 30 October 2020.
Additionally each regions’ Designated Civil Judge (DCJ) has issued a Covid-19 Protocol. There are some minor variations between the regions, but overall the guidance is very similar.
In Northumbria, Durham and Teesside the DCJ guidance for multi-track cases provides that “The parties are at liberty to extend, by consent, any step in the timetable up to a maximum of 90 days (as opposed to the present limit of 28 days)” and the Court does not need to be notified if the Trial date is not effected. Where Trial windows are likely to be impacted due to Covid-19 and the parties are in agreement to extending this, a letter can be sent to the Court with a draft order proposing a new timetable, including a new trial window and agreed availability within the trial window.
The same guidance also confirms that an electronic signature on all documents including witness statements and disclosure statements will suffice.
You will need to check the terms of the contract you have with the debtor to make sure you are still entitled to be paid (including checking any force majeure clause).
It is also important to remember that the current exceptional circumstances might also affect your contractual rights in other ways too – please see our commercial & contracts site for more information.
Depending on the type of debt you are owed, there might be some additional restrictions in place that you will need to consider. For example there are certain restrictions on landlords being able to forfeit leases, evict tenants or send High Court Enforcement Officers to collect outstanding rent.
Assuming there are no sector-specific restrictions in place then you should be able to start county or high court proceedings to recover the debt.
As an alternative to starting court proceedings, if the debt is undisputed a creditor can usually opt to issue winding up proceedings against a debtor instead. However, the recently introduced Corporate Insolvency and Governance Act introduces a temporary suspension on the ability of creditors to present winding up petitions to recover money unless the reason why the debtor cannot pay is not related to covid-19. For more information click here.
Often taking firm action is the right thing to do, particularly given that it is a sad reality that it is the creditor who shouts the loudest that will often get paid first. However, one important consideration is the commercial reality that many businesses (and indeed individuals) now find themselves in.
Whether taking legal action is likely to result in payment is always a question any creditor should ask themselves. Some creditors might also want to try to support their customers during these difficult times and/or have concerns about their long term reputation if they pursue the debt too aggressively. However, even if that is the case it is still possible to engage constructively and positively with those who owe you money to try to reach the best possible outcome. This could include:
- Having clear and consistent credit control processes in place
- Obtaining statements of means to help understand what a debtor can afford to pay
- Agreeing realistic payment plans
- Negotiating formal payment holidays
- Putting in place voluntary security to secure the debt
- Identifying those debtors who can’t pay as opposed to won’t pay and targeting resources accordingly
- Looking at what other options might be available, including recovering under parent company guarantees
After 25 March 2020, and until 30 September 2020, a landlord can only start possession proceedings against a tenant if they have served 3 months’ notice upon the tenant – irrespective of any grounds relied upon.
On 27 March 2020, the Court introduced new rules to put all possession proceedings (except against trespassers) on hold until 25 June 2020 – it means that the Court cannot make an order for possession or any other order that would cause someone to be evicted during that time.
These rules do not just apply to tenants who have fallen into rent arrears.
On 5 June 2020, the Government announced that this stay would be extended further until 23 August 2020.
This means that you can issue new possession proceedings (provided you have complied with the new temporary rules in relation to notice periods, if the notice was served since 25 March 2020) and you can continue with existing possession proceedings.
However, any progress you may be able to make in dealing with those proceedings is likely to be very limited – the Court will allow you to comply with directions orders that have already been made but non-compliance will not be punished (at least for the time being).
These rules, and the latest announcements, are in keeping with the Government’s expectation that landlords show compassion towards affected tenants and that all parties will work together to establish a suitable repayment plan to allow tenants to repay the arrears at an affordable rate.
Commercial leases generally prevent a tenant from withholding payments of rent. If a tenant stops paying rent there will be a breach of the tenant’s covenant to pay rent which, strictly speaking, will entitle the landlord to forfeit the lease and/or seek to recover the arrears in the courts.
However, on 23 March 2020, the Ministry of Housing, Communities and Local Government announced that all commercial tenants in England, Wales and Northern Ireland missing rent payments are to benefit from a government ban on forfeiture of their lease. This change, which will prevent landlords from terminating leases and evicting commercial tenants, is included in the Coronavirus Bill. It will come into force very shortly (once the Coronavirus Bill receives Royal Assent, which is expected to be in a matter of days) and will last until 30 June 2020, with an option for the government to extend this deadline.
It is anticipated that many commercial tenants will take advantage of the reprieve and withhold their rent. Importantly note the rules will apply not only to principal rent but to “any sum a tenant is required to pay”, leaving the burden of supplying services and insuring the premises on landlords.
It is also important to note however that the protection offered by the government is from the threat of forfeiture should tenants withhold rental payments. The liability to pay the rent however remains an interest on unpaid rents will accrue. Furthermore, remedies other than forfeiture may be pursued by the landlord e.g. service of a statutory demand before insolvency or ordinary litigation proceedings for arrears etc.. Tenants then ideally should look to reschedule or suspend rental payment through discussions with their landlord.
The advantage of this being you might be able to negotiate a sensible and manageable repayment program in respect of the suspended rent, free of the threat of litigation.
Yes. The Town and Country Planning (General Permitted Development) (Coronavirus) (England) (Amendment) Order 2020 came into force on 9 April 2020 giving permitted development rights for emergency development. The permitted development right is available to local authorities and health service bodies (as defined) on land owned, leased, occupied or maintained by it for the purposes of:
- Preventing an emergency
- Reducing, controlling or mitigating the effects of an emergency
- Taking other action in connection with an emergency
It could cover, for example, the temporary change of use of buildings into a Nightingale Hospital or the establishment of a testing centre.
The permitted development right is not permitted in certain instances and is subject to a number of conditions including the notification of the local planning authority and the cessation of the use before 31 December 2020.
Further detail of the permitted development right is available at the link below.