The Court of Appeal in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 has held that subject to some caveats the Courts can order the parties to engage in alternative dispute resolution (ADR), or stay the proceedings to enable them to engage in ADR.

This decision clarified that Lord Justice Dyson’s comments in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 that compelling parties to engage with ADR would 'impose an unacceptable obstruction on this right of access to the Court' are obiter dicta, thus not binding on the courts.

Background

The Claimant commenced proceedings against the Defendant for damage to his property caused by Japanese knotweed that had spread to his property from neighbouring land owned by the Defendant.

The Defendant invited the claimant to use its internal Corporate Complaints Procedure to resolve the matter upon receipt of the Claimant’s letter before action. This invitation made it clear that if the Claimant issued proceedings without engaging with the Defendant’s complaints procedure, they would apply to the Court for a stay and would seek costs. The Claimant did not engage with the complaints procedure and issued proceeding and the defendant subsequently applied for a stay.

At the first stage, the Deputy District Judge (DDJ) held that the Claimant had failed to comply with the pre-action protocol and had acted unreasonably by failing to engage Defendant’s complaints procedure. However, the DDJ held that he was bound by Lord Justice Dyson’s statement in Halsey set out above and dismissed the defendant’s application to stay the proceedings.

Court of Appeal Decision

The matter was transferred to the Court of Appeal due to its complexity and the court identified and made findings on four issues below:

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

The Court held that the DDJ was not bound by Halsey because the passage on which the DDJ relied was not a necessary part of the reasoning that led to the Court of Appeal’s decision in that Halsey. The result being that Lord Dyson’s comments in Halsey were obiter dicta.

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

On this issue, it was held that the Court does have the power to stay proceedings for, or order, the parties to engage in ADR, provided that the order/stay:

• Does not impair the Claimant’s right to a fair trial under Article 6 of the European Convention of Human Rights;
  
  
• Is made in pursuit of a legitimate aim; and
  
  
• Is proportionate to achieving that legitimate aim.

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?

On this question, the Court refused to provide a list of factors, instead finding that it would be a matter for the Courts to determine in the circumstances of each case as to when to compel parties to engage with ADR.

4. Should the court have allowed the defendant’s application for a stay to allow the claimant to engage with the complaints procedure?

Finally, the Court allowed the appeal on this point, but declined to order a stay of the proceedings, on the basis that it would not be appropriate at this stage, as matters had since moved on. Further, the Court could not properly grant a mandatory injunction requiring the Claimant to allow the Defendant to treat the knotweed, as this not been requested.

Summary

This decision will be welcomed by many and will enable the Courts to require parties (if appropriate) to consider alternative and cost-effective solutions to proceeding to trial. In practical terms, this case may see a Court becoming more likely to make orders staying proceedings to allow for a mediation. This move to the further use of ADR could also ease the burden on the Court system with the current backlog of cases.

Furthermore, the Ministry of Justice is currently consulting on expanding the use of mediation for claims worth up to £10,000. With this and Churchill in mind it clearly indicates that ADR will be an important point of consideration for the future.

It should be noted however, that this decision does not make mediation a compulsory step in all Court proceedings, nor does it deny the parties the right to continue to trial in the event that they do not settle at the mediation stage.

The full judgment can be found at: Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 (29 November 2023) (bailii.org)