Perfume shop can use coronavirus rules in dispute with designer outlet landlords

The Court of Appeal has temporarily halted long-running possession proceedings between a perfume retail chain and its landlords, citing emergency coronavirus measures. Retailer The Fragrance Shop, which has six outlets, has been in dispute with landlords including The Designer Retail Outlet Centres in York and Mansfield and McArthurGlen in Ashford since 2017. The case is one of three that have recently been fast-tracked though the court system. The proceedings started when the shop sued for an injunction preventing the landlord from taking possession, and the landlords countersued, seeking possession. The case has been fought through the courts, and was due to be heard in June. However, in May the retailer wrote to the High Court arguing that the proceedings should be stopped for the duration of the coronavirus pandemic. The High Court disagreed, but in a ruling today the Court of Appeal reversed the ruling and stopped the case. The case centres on the proper interpretation of Practice Direction 51Z, an emergency measure that stops possession proceedings for the duration of the pandemic. The direction applies to “proceedings for possession brought under CPR Part 55”, which is the usual civil procedure rule used by landlords to get their properties back. The High Court ruled that the measures shouldn’t apply in this case because the proceedings didn’t start by the landlords bringing proceedings under CPR Part 55; they started when the tenants issued a claim seeking to stop possession from being taken. However, in his ruling, appeal court judge Sir Geoffrey Vos disagreed. He ruled that, although the proceedings were not brought under CPR 55, when the landlords countersued they used CPR 55. That, he said, is enough to trigger the current coronavirus rules. “This analysis… fits with the reality of the situation more generally,” he said in his ruling. “The tenant started the first action to resolve the legal issue that underlay the question of whether or not it was entitled to remain in possession of the two properties. It was inevitable that the landlords would counterclaim for possession, which was itself the inevitable consequence of their position,” he said. “This is the case in many types of landlord and tenant dispute. Underlying legal issues need to be resolved, but their determination leads to the conclusion that the landlord either will or will not be entitled to recover possession from the tenant. “The blanket stay must be given effect,” he said. TFS Stores Ltd and The Designer Retail Outlet Centres (Mansfield) General Partner Ltd (2) British Overseas Bank Nominees Ltd (3) WGTC Nominees Ltd Defendants/Respondents/Landlords Claim No.PT-2018-000035 v BMG (Ashford) Ltd UK OM (LP2) (GP) Ltd UK OM (LP2) Ltd The Designer Retail Outlet Centres (York) General Partner Ltd And   UK OM (LP3) (GP) Ltd UK and (OM) (LP3) Ltd v TFS Stores Ltd Joanne Wicks QC and Mark Galtrey (instructed by DLA Piper) appeared for the appellants/tenants. Wayne Clark and Joseph Ollech (instructed by Shoosmiths LLP) appeared for the respondents/landlords. Court of Appeal (Vos LJ, Asplin LJ, Arnold LJ) Photo: Dinendra Haria/Shutterstock