Introduction
On 29 November 2023, the Court of Appeal (the “CoA”) handed down its judgment in the case of Churchill v. Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 (“Churchill”). The headline questions were whether a court can lawfully order the parties to court proceedings – in this case, Mr Churchill and Merthyr Tydfil County Borough Council (the “Council”) – to engage in a non-court-based dispute resolution process and, if so, in what circumstances it should do so. The ‘non-court-based dispute resolution’ process at the centre of the dispute was the Council’s internal complaints procedure, a procedure to which Mr Churchill was not contractually bound. A question also arose as to whether, and in what way, the nature of the non-court-based dispute resolution process should be taken into account by the court.
Case summary
The underlying claim was for nuisance allegedly caused by Japanese knotweed. In July 2021, Mr Churchill brought a claim against the Council, alleging that the Japanese knotweed had spread from Council land onto his property. Mr Churchill did not use the Council’s internal complaints process before issuing proceedings. The Council argued that Mr Churchill had therefore refused to engage in a form of alternative dispute resolution (“ADR”). The Council sought an order staying the proceedings for three months so that Mr Churchill could go through its internal complaints procedure.
In May 2022, Deputy District Judge Kempton Rees (the “Judge”) dismissed the stay application, holding that he was bound by the case of Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 WLR 3002 (“Halsey”). In that case, Lord Justice Dyson stated that “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” [para. 9].
The Council appealed and the case was leapfrogged to the CoA on the grounds that it raised an important point of principle and practice and that there were other similar cases.
There were several interveners in the case, including, among others, the Bar Council, the Law Society and three dispute resolution groups (Civil Mediation Council, the Chartered Institute of Arbitrators and the Centre for Effective Dispute Resolution).
The main issues that the CoA had to resolve, and its conclusions, were as follows:
1. Was the Judge right to think that Halsey bound him to dismiss the Council’s application for a stay of the proceedings?
In Halsey (a case predominantly concerned with costs issues), Lord Justice Dyson provided guidance as to the general approach in dealing with the costs issues raised in that case and the factors that should be considered in deciding whether a party’s refusal to agree to ADR was unreasonable.
Specifically, the CoA considered whether the passages in Halsey relied upon by the Judge when he dismissed the stay application, being paragraphs [9]–[10] of the judgment, were part of the main reasoning in that case. The CoA decided that [9]–[10] of the judgment in Halsey were obiter; Lord Justice Dyson’s ruling on whether the court had power to order the parties to mediate “was not expressly or impliedly a necessary step in reaching the conclusions on the costs questions” decided in that case. The CoA considered that the factors identified by Lord Justice Dyson as relevant to the costs issue in Halsey were relevant whether or not the court had power to require the parties to mediate [para. 19].
As a matter of law then, the Judge was not bound by what Lord Justice Dyson had said in the relevant paragraphs from the judgment in Halsey.
2. Can the court lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process?
The CoA concluded that, as a matter of law, the power to stay existing proceedings for, or order, the parties to engage in a non-court-based dispute resolution process did indeed exist [para. 58]. Although, the CoA emphasised that the power must be exercised so that it does not impair the very essence of a party’s right to a fair trial under Article 6 of the European Convention on Human Rights, in pursuit of a legitimate aim, and in such a way that it is proportionate to achieving that legitimate aim [para. 50].
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 CoA found that the court should only “stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost” [para. 65].
Whether the court should order or facilitate any 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 [para. 59]. The CoA declined to lay down fixed principles as to what will be relevant, but acknowledged that the “characteristics” of a non-court-based dispute resolution under consideration by the parties would be “relevant to the exercise of the court’s discretion as to whether to order or facilitate it” [para. 60].
Notably, the CoA considered that the question as to whether the Council’s internal complaints procedure was a form of ADR was “academic” [para. 64]. The court can stay proceedings for any process that has a prospect of allowing the parties to resolve their dispute [para. 64].
4. Should the Judge have granted the Council’s application to stay these proceedings to allow Mr Churchill to pursue a complaint under the Council’s internal complaints procedure?
The CoA held that whilst it is “obvious” that the Judge would have stayed the claim back in May 2022, had he been able to see the present judgment, things had moved on “considerably” since it was first sought by the Council and “nothing will be gained” by granting a stay now [paras. 71–72].
The CoA therefore allowed the appeal in part (with regards to issues 1 to 3 above) but declined to order a stay. However, it did conclude its judgment by saying that the parties “ought to consider whether they can agree to a temporary stay for mediation or some other form of non-court-based adjudication” [para. 75].
Comment
The Civil Procedure Rules, including the Pre-Action Protocols, provide an encouraging pathway for both the parties and the court to ADR. However, Halsey was viewed as a barrier to court mandated ADR in circumstances where one party was unwilling or where court proceedings had been initiated. This was on the basis that the ADR process is a voluntary one; the role of the court was to encourage, not to compel.
The CoA’s decision in Churchill marks a significant milestone in the ADR landscape and pulls down the barrier to court mandated mediation put up by Halsey in circumstances where court proceedings have commenced. As a result, the court can lawfully stay existing proceedings for, or order, the parties to engage in a non-court-based dispute resolution process, if it is proportionate and preserves the essence of the parties’ right to a judicial hearing.
Finally, the fact that the CoA chose not to refer to ADR in its judgment, opting for ‘non-court-based dispute resolution’, is of note. The CoA has cast the ‘ADR’ net wide so as to catch internal complaints procedures, provided such procedures are rigorous enough to satisfy the legitimate aim of settling a dispute fairly, quickly and at reasonable cost. However, it must be remembered that whether the court should order or facilitate any particular method of non-court-based dispute resolution in a particular case will be a matter for its discretion, where multiple factors could be relevant.
Client Alert 2023-275
