Court of Appeal holds that the court can order parties to engage in alternative dispute resolution

Published on 23.02.24
Published on 23.02.24

In the recent case of  Churchill v Merthyr Tydfil County Borough, the Court of Appeal decided that courts can order parties to engage in alternative dispute resolution (ADR) or stay proceedings to enable them to do so. The case confirms the judiciary’s recent support for resolving disputes by ADR. It is also in line with the Civil Justice Council’s recommendation in August 2023 that the pre-action protocol should oblige parties to use ADR. Partner Adam King reviews the decision and its ramifications.

Background to the case

The claimant brought proceedings against the local authority for damages caused by Japanese knotweed that had spread onto his property from the council’s adjoining land. The defendant responded to the claimant’s pre-action letter of claim by inviting the claimant to engage with its corporate complaints procedure. It told the claimant that if it did not do so, it would seek a stay of the proceedings and apply for costs. The claimant issued proceedings anyway, and the defendant then applied for a stay.

First instance decision

The deputy district judge dismissed the defendant’s application to stay the proceedings. Although he found the claimant acted unreasonably by failing to engage with the complaints procedure, he said he was bound by Lord Justice Dyson’s statement in Halsey v Milton Keynes General NHS Trust. In that case, Lord Justice Dyson said: “To oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court.”

Court of Appeal decision

The Court of Appeal unanimously allowed the defendant’s appeal. Sir Geoffrey Vos, Master of the Rolls, gave the leading judgment in which he dealt with the following issues:

Issue 1 – was the district judge bound by Halsey to dismiss the defendant’s application for a stay?

The Court of Appeal held that Lord Justice Dyson’s statements were obiter (ie incidental to and not essential to the decision in the case) and, therefore, not binding on the district judge.

Issue 2 – can a court lawfully stay proceedings or order the parties to engage in ADR?

The Court of Appeal held that a court has such power, provided the court’s order:

  • does not impair the claimant’s right to a fair trial under the European Convention on Human Rights (ECHR),
  • is made pursuant to a legitimate aim, and
  • is proportionate to achieving that legitimate aim.

Issue 3 – How should a court decide whether to stay proceedings or order the parties to engage in ADR?

The Court of Appeal said this is a matter for the court’s discretion in each case and “it would be undesirable to provide a checklist or a score sheet for judges to operate”.

However, it identified factors that may be relevant, such as the form of ADR being considered, the costs of the ADR, whether the parties were legally represented and whether there was a realistic prospect of the case being resolved through ADR.

Issue 4 – should the court have granted the defendant an application for a stay in this case?

The court said the deputy district judge would have ordered a stay had he not felt bound by the decision in Halsey. However, as things had “moved on”, there was little point in granting a stay now. It encouraged the parties to agree to a stay for mediation or other form of non-court-based adjudication.

Conclusion

This decision will be welcomed by many parties to litigation, given the cost and time involved in going to court.

Having said that, ADR only works if both parties are committed to the process. If they are not, it can be an expensive waste of time. Also, there is a risk the Court of Appeal’s decision may actually give rise to additional litigation if parties make tactical applications for an ADR order as part of their case strategy.

If you have any queries in relation to the draft protocol, please contact Adam King at [email protected].

Disclaimer: The above is merely general guidance and should not be relied on as formal advice. We suggest you take professional legal advice before taking any action in relation to the issues discussed above.