Do you have to mediate? Almost certainly… yes

9 minute read
18 January 2024

For the last 20 years, the courts in England and Wales have been guided by the Court of Appeal decision in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 (11 May 2004) when it comes to requiring parties to civil litigation disputes to engage in alternative dispute resolution (ADR), including mediation. The position has been clear - courts have been able to encourage, but not compel parties to engage in ADR.

That has been changed by the highly anticipated Court of Appeal decision in James Churchill -v- Merthyr Tydfil County Borough Council - Courts and Tribunals Judiciary [2023]. The judgment confirms what many were expecting; the court does have the power to stay proceedings and compel parties to engage in ADR.

Parties to a dispute will often consider ADR, including mediation, as part of a disputes process in any event; whether because they are party to a contract with an escalating dispute resolution mechanism, or in an attempt to avoid the full extent of the cost and uncertainty of having issues determined at a trial. This decision, however, indicates a "hardening" of the judicial attitude towards parties unreasonably refusing to attempt ADR and is to be welcomed. In this article, we consider the key elements of the case and highlight the practical considerations arising from it.



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Background

The Claimant, Mr Churchill, purchased a property in 2015 (the Property). Merthyr Tydfill County Borough Council (the Council) owned the land adjacent to the east of the Property.  Mr Churchill claimed that Japanese knotweed had encroached from the land onto the Property since 2016, causing damage to the Property, a reduction in its value and loss of enjoyment. In October 2020, he sent a letter of claim to the Council. The Council replied in January 2021, questioning why Mr Churchill had not followed its 'Corporate Complaints Procedure'. It confirmed that if Mr Churchill went ahead and issued proceedings without following the complaints procedure, it would apply for a stay of proceedings and for payment of its costs. Despite that warning, Mr Churchill went ahead and issued his claim against the Council in July 2021. The Council issued a stay application in February 2022.

The Deputy District Judge found that Mr Churchill had acted unreasonably in failing to engage with the Council's complaints procedure, and that his conduct was contrary to the spirit and the letter of the relevant pre-action protocol. However, the stay application was dismissed - the judge held that he was bound to follow the statement of Lord Justice Dyson in the 2004 Court of Appeal decision in Halsey v Milton Keynes General NHS Trust:

“… 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”.

The Council appealed.

Court of Appeal decision

The Court of Appeal unanimously allowed the appeal – setting out its response to four key issues.

    1. Was the judge right to think that Halsey bound him to dismiss the Council's application?

    The Court of Appeal held that the Deputy District Judge had not been bound by Halsey and was not required to dismiss the Council’s application for a stay. The passages from the Halsey judgment, on which the judge relied, were not a necessary part of the reasoning that led to the Court of Appeal’s decision in that case. The passages were obiter dicta – they were not legally binding.

    2. If not, can the court lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process?

    In short – yes. 

    Having analysed domestic case law, relevant cases from the European Court of Human Rights and pre-Brexit decisions of the Court of Justice of the EU, the Court of Appeal held that the court does have the power to stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process. This can be done provided that the order made:

    • does not impair the very essence of the claimant’s right to a fair trial under Article 6 of the European Convention on Human Rights; and
    • is proportionate to achieving the legitimate aim of settling the dispute fairly and at reasonable cost.

    The Court of Appeal also confirmed its conclusion was supported by the Civil Justice Council’s June 2021 Report on Compulsory ADR, which expressed the view (at paragraph 58) that “any form of ADR which is not disproportionately onerous and does not foreclose the parties’ effective access to the court will be compatible with the parties’ Article 6 rights”, and (at paragraph 60) “we think the balance of the argument favours the view that it is compatible with Article 6 for a court or a set of procedural rules to require ADR”.

    3. If so, how should the court decide whether to stay the proceedings for, or order, the parties to engage in a non-court-based dispute resolution process?

    The Court of Appeal declined to define 'non-court-based dispute resolution' or lay down fixed principles as to what will be relevant to determining when a stay for ADR (or the form it should take) should be ordered. The court stressed that:

    “Experience has shown that it is extremely beneficial for the parties to disputes to be able to settle their differences cheaply and quickly. Even with initially unwilling parties, mediation can often be successful. Mediation, early neutral evaluation and other means of non-court-based dispute resolution are, in general terms, cheaper and quicker than court-based solutions. Whether the court should order, or facilitate, any particular method of non-court-based dispute resolution in a particular case is a matter of the court’s discretion, to which many factors will be relevant.”

    The Master of the Rolls held that it would be undesirable to provide a checklist or a score sheet for judges to operate - judges will be well-qualified to decide whether a particular process is or is not likely or appropriate for the purpose of achieving the important objective of bringing about a fair, speedy and cost-effective solution to the dispute and the proceedings, in accordance with the overriding objective.

    4. Should the judge have acceded to the Council's application to stay these proceedings to allow Mr Churchill to pursue a complaint under the Council's internal complaints procedure?

    It was clear to the Court of Appeal that, had the judge not concluded that he was bound by Halsey to refuse a stay, he would have granted one to require Mr Churchill to engage in the Council’s internal complaints procedure.

    However, by the time its decision was made the Court of Appeal did not see value in ordering a stay at that stage. The Court of Appeal did, however, indicate a provisional view that the parties should consider whether they could agree a stay for mediation – or some other form of non-court-based adjudication.

What will this mean for future civil litigation disputes?

Now that the court has a clear power to stay proceedings and make an order compelling parties to participate in any suitable form of ADR, no party can afford to ignore ADR or simply discount it. There is now a new tool in the armoury of those seeking to explore ADR as a means to resolving a dispute (although a productive outcome from that process obviously remains beyond guarantee). If the court is required to make an order to make ADR happen then now, even more clearly than before, cost consequences for the unwilling party will surely follow.

This case also underlines the desire of the Courts (which has long since been enshrined in the 'overriding objective' of the Civil Procedure Rules) not to have disputes utilising limited and valuable resources where an alternative solution is available, and a continued belief that ADR can offer a practical route to resolving disputes. Parties should, therefore, continue to actively consider ADR methods, both when drafting dispute resolution clauses (particularly in complex, long-term contractual relationships) and when disputes arise (given that there is no requirement to have pre-agreed the process).

Please contact Emma Carr or Sean Adams for further information, or to discuss any of the key points raised in this article.


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