On the First Day of Christmas....Can courts mandate parties to engage in non-court-based dispute resolution processes?
Background
In the case of Churchill v. Merthyr Tydfil County Borough Council James Churchill, the claimant, purchased a property in Merthyr Tydfil in 2015, which later suffered from Japanese knotweed encroachment from adjacent land owned by the Council. Churchill sought damages for the nuisance caused by the knotweed, but the Council argued that he should have used their internal complaints procedure before initiating legal proceedings.
Key Issues
- Legal Authority to Mandate ADR: The Court of Appeal examined whether the precedent in Halsey v. Milton Keynes General NHS Trust, (which suggested that compelling unwilling parties to mediate would obstruct their right to court access), was binding and whether courts have the power to order parties to engage in alternative dispute resolution (“ADR”) processes.
- Nature of ADR Processes: The case considered the appropriateness of different ADR methods, including internal complaints procedures, and their impact on the right to a fair trial.
- Proportionality and Legitimate Aim: The court evaluated whether mandating ADR would impair the essence of the claimant’s right to a judicial hearing and whether such orders pursue a legitimate aim proportionately.
Decision
Judicial Authority and ADR: The Court of Appeal clarified that courts do have the authority to stay proceedings and order parties to engage in ADR, provided it does not impair the claimant’s right to a fair trial under Article 6 of the ECHR and is proportionate to achieving a legitimate aim. This decision potentially broadens the scope for courts to encourage or mandate ADR, promoting quicker and cost-effective dispute resolutions.
Considerations: If a court is considering whether to order parties to attend a mediation, it may consider factors such as:
- The form of ADR being considered;
- Whether the parties are legally advised or represented;
- Whether that delay would vitiate the claim or give rise to or exacerbate any limitation issue;
- The costs of ADR, both in absolute terms, and relative to the parties’ resources and the value of the claim;
- Whether there is any realistic prospect of the claim being resolved through ADR; and
- Whether there is a significant imbalance in the parties’ levels of resource or bargaining power.
Nevertheless, it was made clear that it was not the place of the Court of Appeal to set out fixed principles as to what factors will be relevant to determining whether a court should stay proceedings for non-court-based dispute resolution. This should be left to the discretion of the judge dealing with the matter and the judge should approach each case on its own facts.
Implications
Impact on Legal Practice: This ruling may influence how legal practitioners advise their clients regarding pre-litigation steps and the use of ADR. Lawyers might need to place greater emphasis on exploring and documenting ADR efforts to avoid potential cost sanctions or procedural delays.
ADR Processes and Fairness: The case highlights the importance of ensuring that ADR processes are fair and accessible. Factors such as the involvement of neutral third parties, the availability of legal advice, and the suspension of limitation periods during ADR processes are crucial in maintaining the balance between efficient dispute resolution and protecting litigants’ rights.
Changes to the Civil Procedure Rules: This links to The Civil Procedure (Amendment No.3) Rules 2024, which took effect on 1 October 2024. Emphasising the importance of ADR in case management, this rule extended court powers to allow for ordering ADR. Courts now also have the power to consider parties’ conduct regarding ADR when addressing costs.
