The recent Court of Appeal (COA) decision in Churchill v Merthyr Tydfil County Borough Council (the “Council”) (29 November 2023) highlights the court’s ability to compel parties in court proceedings to engage in Alternative Dispute Resolution (ADR) such as mediation. The decision confirms the courts have the right to order a stay (pause) of process for that purpose.
The Law Society, Bar Council, Civil Mediation Council, Chartered Institute of Arbitrators, and Centre for Effective Dispute Resolution joined forces to intervene in the case, arguing strongly for this outcome.
James Churchill issued a letter of claim to the Council seeking damages for reduction in value and loss of enjoyment of his property due to Japanese knotweed. He claimed the knotweed had encroached on his land, to the east of his property, from the Council's land.
In response, the Council advised Mr Churchill that he should have used its internal Corporate Complaints Procedure (the “Council’s Complaints Procedure”), and if proceedings were raised without using that procedure then the Council would apply to the court for a stay and for costs. Mr Churchill issued proceedings against the Council for nuisance, following which the Council issued a stay application.
The Deputy District judge disapproved of Mr Churchill's failure to engage with the Council's Complaints Procedure and the relevant pre-action protocol, the latter of which expects parties to have raised litigation as a last resort following consideration of forms of ADR, such as mediation, to assist with settlement.
However, the Deputy District judge felt bound by Lord Justice Dyson's decision in Halsey v Milton Keynes General NHS Trust ("Halsey"), particularly the following passage:
"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".
He therefore dismissed the Council’s stay application on 12 May 2022.
In August 2022, the Council was granted permission to appeal to the COA.
Firstly, the COA held the Deputy District judge was not bound by Halsey. Halsey was about the potential cost consequences and factors that are to be considered when deciding whether a refusal to agree to ADR was unreasonable. These considerations did not extend to whether the court had the power to require ADR.
Secondly, the COA held the court has the power to stay proceedings for, or to order, the parties to engage in ADR. There is, however, a distinction between the existence of the power and its exercise.
Mr Churchill argued that the stay to engage in ADR could not be granted if it did not allow for:
- Mr Churchill's access to lawyers;
- payment of Mr Churchill's legal costs; and
- independence of the process from the Council's management.
The COA clarified those factors affected the court's discretion in exercising its power to order a stay, not the power itself.
The COA also considered that the right to a fair trial under Article 6 of the European Convention on Human Rights (the ECHR) would not be contravened where the order to stay proceedings for ADR was made in pursuit of, and proportionate to, achieving the legitimate aim of settling a dispute fairly, quickly and at reasonable cost.
Thirdly, the COA reviewed how the court should decide whether to exercise the power to stay proceedings for ADR. The COA held it is beneficial for the parties to be able to settle their differences in a more cost and time effective manner, even with unwilling parties. Fixed principles should not be laid down. Any order to stay for ADR is to be made at the discretion of the court with reference to the characteristics and relevance of the ADR process for the particular action.
Lastly, the COA declined to order the stay of proceedings to allow the Council’s Complaints Procedure to take place given the circumstances of the claim, as the COA doubted progress would be made. The Council's Complaints Procedure appeared unsuitable for this private law claim. The total value of all knotweed claims against the Council was "very high", creating an entrenched dispute which the Council's Complaints Procedure appeared unsuitable to address. Mr Churchill had also refused to allow the Council to treat the knotweed, referring to his right to seek compensation and costs from the court. However, the Court did encourage the parties to explore mediation instead.
Points to take away
- The courts in England and Wales have the right to order a stay of proceedings to compel parties to engage in ADR.
- The order to stay and the ADR process must not affect the parties' right to a fair trial under ECHR.
- Any order to stay for ADR is subject to the court’s discretion with reference to the circumstances and characteristics of the particular case and ADR process proposed.