The recent Court of Appeal judgment in Churchill v Merthyr Tydfil County Borough Council  EWCA Civ 1416 provides important clarification as to whether the courts can, and will, order parties to participate in non-court based dispute resolution. Up to this point, it was widely considered that the courts would be unlikely to compel parties to participate in alternative dispute resolution (ADR). This was based on the Court of Appeal’s decision in Halsey v Milton Keynes General NHS Trust  EWCA Civ 576, which was perceived to mean that mandatory ADR was an unacceptable obstruction to the right of access to the courts. However, in Churchill, it was clarified that in certain circumstances the court may stay litigation to order parties to engage in ADR.
Mr Churchill’s house (purchased in 2015) adjoined Council land. He claimed that Japanese knotweed growing on the Council’s land had encroached onto his property since 2016. A letter of claim was sent to the Council in 2020. In response, the Council queried why Mr Churchill had not made use of an internal complaints procedure and confirmed that, if proceedings were issued, they would apply for a stay so that procedure could be followed. Mr Churchill issued his claim and the Council duly applied for a stay.
Decision at first instance
DDJ Kempton Rees dismissed the stay application. While critical of Mr Churchill for not engaging with the Council’s complaint procedure, the Judge considered himself bound by Halsey. The Council were given permission to appeal.
The decision of the Court of Appeal
Sir Geoffrey Vos, Master of the Rolls (with whom Baroness Carr, Lady Chief Justice, and Lord Justice Birss agreed) found that Halsey was not binding, holding that the courts do have the power to order parties to “engage in a non-court-based resolution process” and can stay proceedings for that purpose.
Why was Halsey not binding? The passage from Halsey which stated that compelling ADR would impose “an unacceptable obstruction on their right of access to the court” was, according to the Court of Appeal, not a “necessary step”  in Dyson LJ’s conclusion and therefore “obiter” (in plain terms “said in passing”) and as such, not binding.
With Halsey not binding, do courts have the prima facie power to order a stay of proceedings and compel parties to engage in ADR? The Court of Appeal held that under CPR 1.4(1), which states the courts must “further the overriding objective by actively managing cases”, they do. It was also noted that CPR 1.4(2)(3) states that active case management includes encouraging parties to use ADR if the court considers that “appropriate” .
Does this infringe on parties’ Article 6 rights?
The Court of Appeal in Churchill considered a range of authorities (from both the European Court of Human Rights, the European Court of Justice and the domestic courts) in which courts’ case management powers had been considered alongside Article 6.
It was held that the courts, when exercising powers under the CPR, would not infringe Article 6, if an order:
- Does not impair the very essence of the claimant’s right to a fair trial;
- Is made in pursuit of a legitimate aim; and
- Is proportionate to achieving that aim.
Whilst the courts can stay proceedings and order parties to engage in ADR, this is not unfettered. Such an order needs to be proportionate to “achieving the legitimate aim of settling the dispute fairly, quickly and at a reasonable cost” .
It was noted in Churchill that the application of the decision in future will be a matter of discretion: “the merits and demerits of the [ADR] process suggested will need to be considered by the court in each case” .
Interestingly, a stay was not actually ordered here. Whilst the court would have done so when Mr Churchill’s claim was issued, “there would be little point in doing so now” . And while it was noted that the Council’s internal complaints procedure may not be the “most appropriate” for a dispute such as this, the issue was not considered substantively and was left to be resolved at a later date.
This judgment may be a turning point for ADR that could lead to a dramatic increase in mediations and other forms of ADR. That said, it is worth bearing in mind the Court’s acceptance of the need to balance the power to compel ADR with parties’ rights under Article 6 of the ECHR, and the emphasis placed on discretion throughout the judgment. How the decision will be applied in each particular case will be fact-sensitive.
In any event, although the merits of the Council’s complaint procedure were not ultimately assessed, parties should bear in mind that where there is an obvious avenue for ADR which isn’t utilised, they should be prepared to justify this to the Court. Represented and equally resourced parties, in particular, will find it difficult to resist a stay for mediation (the merits of which were extolled by the Court of Appeal).
In summary, the Court can order parties to engage in ADR and will stay proceedings to do so if necessary and appropriate. Parties anticipating or already engaged in proceedings should be mindful of this and, where appropriate, look to engage in ADR before the Court is asked to intervene.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, December 2023