Churchill: Courts have power to compel parties to engage with ADR

In a landmark decision, the Court of Appeal in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 has held that the courts can order the parties to engage in alternative dispute resolution (ADR), or stay the proceedings to enable them to engage in ADR, provided that the order or stay does not undermine the claimant’s right to proceed to a judicial hearing, and it is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost. In doing so, the Court of Appeal in Churchill finally confirmed that Lord Justice Dyson’s controversial comments in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 - that to compel parties to engage with ADR would 'impose an unacceptable obstruction on this right of access to the court' - were obiter dicta and, therefore, not binding on the courts.

Background and first instance decision

The claimant commenced proceedings against the local authority for damages to his property caused by Japanese knotweed, which had spread to the claimant’s property from neighbouring land owned by the defendant local authority. In response to the claimant’s pre-action letter of claim, the defendant invited the claimant to use its internal Corporate Complaints Procedure (CCP) to resolve the matter. The defendant made clear that if the claimant decided to issue proceedings without engaging with its CCP, it would apply to the court for a stay and would also seek its costs in doing so. However, the claimant did not engage with the CCP and issued proceedings against the defendant, and, consequently, the defendant applied for a stay.

Although the deputy district judge found that the claimant had acted unreasonably by failing to engage with the defendant’s CCP, and behaved contrary to the general pre-action protocol, he held that he was bound by Dyson’s statement in Halsey v Milton Keynes General NHS Trust 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.' Thus, the judge dismissed the defendant’s application to stay the proceedings.

Court of Appeal Decision

Given the importance of the issues that the case raised, it was transferred directly to the Court of Appeal. The leading judgment was given by Sir Geoffrey Vos with which Lady Chief Justice Carr and Lord Justice Birss agreed.

The court identified the following main issues which required to be resolved:

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

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

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? and

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

On issues 1, the court held that the judge was not bound by Halsey because the passage on which the judge relied was not a necessary part of the reasoning that led to the Court of Appeal’s decision in that case, i.e. Dyson’s passage was obiter dicta, rather than ratio decidendi. The court explained that the court in Halsey was concerned with whether a costs sanction should be imposed against the successful parties on the basis that they had refused to engage with mediation. The court in Halsey held that there should be no costs sanction as it had not been established that the parties’ refusal was unreasonable. The court also identified a number of factors as relevant in deciding whether a refusal to mediate was unreasonable. It was in that context that Dyson had made his comments on ADR compulsion and, Vos argued, that was not a necessary step in reaching the court’s conclusions on the costs questions decided in the appeals. The factors the court identified as relevant to the issue of unreasonable refusal to engage with ADR were relevant whether or not the court had power to require the parties to mediate.

On issue 2, the court considered domestic cases, European Court of Human Rights and pre-Brexit cases from the Court of Justice of the European Union, as well as relevant legislation and the Civil Procedure Rules. The court held that the courts do have the power to stay proceedings for, or order, the parties to engage in ADR, provided that the order made (i) does not impair the very essence of the claimant’s right to a fair trial under article 6 of the ECHR; (ii) is made in pursuit of a legitimate aim; and (iii) is proportionate to achieving that legitimate aim. The court distinguished R (UNISON) v Lord Chancellor [2017] UKSC 51 in which the Supreme Court held the right of access to the courts could only be curtailed by express primary legislation, and therefore the statutory instrument increasing fees to being claims in the Employment Tribunal was unlawful because it prevented access to justice. The court explained the statutory instrument in UNISON was found to have prevented access to the court but this did not mean that primary legislation was required to enable existing proceedings to be stayed or delayed for a legitimate objective such as achieving resolution of the dispute by other means.

On issue 3, the court refused to provide a list of factors which would assist the courts in determining when to exercise its powers to compel parties to engage with ADR; it would be a matter for the courts to determine in the circumstances of each case. As Vos put it: '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….it would be undesirable to provide a checklist or a score sheet for judges to operate.'

Finally, on issue 4, the court allowed the appeal on this point, but declined to order a stay of the proceedings. It held that, if the judge had not concluded that he was bound by Halsey to refuse a stay, he would have granted one to allow the claimant to engage with the CCP. However, the court found that there was little point in granting a stay of the claim now, as the court could not properly grant a mandatory injunction requiring the claimant to allow the defendant to treat the knotweed, which had neither been sought nor argued.

Commentary

The decision is a significant development in enhancing the role of ADR (or, as Vos put it, ‘dispute resolution’) within the English civil justice system. By confirming that the controversial comments in Halsey on the issue of compulsory ADR were obiter and, therefore, not binding on the courts, the court in Churchill has made clear that the courts can, in appropriate cases, compel parties to engage with ADR which may result in settling disputes fairly, quickly and at reasonable as compared with pursuing disputes through the courts. In this regard, the decision is consistent with, and reinforces, the current reform programme in integrating ADR within the pre-action space (see the CJC Review of the Pre-action Protocols Interim Report (2022) Final Report Part I (2023)) as well as during the court process. Indeed, in Churchill, Vos explained that the conclusion of the court 'is supported by the Civil Justice Council’s June 2021 Report on Compulsory ADR which expressed the view that "any form of ADR which is not disproportionality onerous and does not foreclose the parties’ effective access to the court will be compatible with the parties’ Article 6 rights."' The report went on to state '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.' Furthermore, the Ministry of Justice is currently consulting on expanding the use of mediation for claims worth up to £10,000. These significant developments clearly indicate that ADR will remain high on the reform agenda and will continue to form an important part of the civil justice landscape.

Masood Ahmed is an associate professor of law at the University of Leicester, and a member of the Law Society’s Dispute Resolution Committee. Lal Akhter is director of Docket Live and an unregistered barrister