The recent Court of Appeal decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 has had a profound impact on litigators, given the Court now has the power to compel parties to engage in Alternative Dispute Resolution (ADR).
In this article Ruby Keeler-Williams looks at the background of the matter, considers the decision and looks at the implications going forward.
Background
The case involved a property dispute between Mr Churchill, the Claimant, and Merthyr Tydfil County Borough Council, the Defendant. Mr. Churchill alleged that Japanese knotweed had spread from the Council’s land onto his property, causing damage and diminishing its value. He initiated a nuisance claim against the Council.
However, the Council countered that Mr. Churchill was obligated to make use of their internal complaints procedure before pursuing litigation. They sought a stay of proceedings, aiming to enforce use of this process.
Initial Decision and Appeal
In the first instance, the judge dismissed the Council’s stay application, citing Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, in which it was suggested that the court compelling ADR could obstruct a party’s right to access the court system. However, this decision was successfully appealed by the Council.
The Court clarified that the relevant passage from Halsey which stated that compelling ADR would impose ‘an unacceptable obstruction on their right of access to the court’ was, according to the Court of Appeal, not a ‘necessary step’ in Lord Justice Dyson’s conclusion and therefore was ‘obiter’ and not binding. This was because the issue of whether or not the court had the power to compel ADR was only raised in Halsey during oral argument.
The court went on to clarify that Dyson LJ, in Halsey, was primarily focused on providing guidance on how to assess whether a party acted unreasonably in refusing ADR in the context of a costs order, rather than definitively ruling on the court’s power to mandate ADR
Court can Direct Parties
It was subsequently decided that the Court possesses the power to order parties to engage in ADR, including issuing a stay of proceedings to facilitate such processes.
This authority stemmed from CPR Part 1 and in particular:
- CPR 1.4(1) – which sets out the Court’s duty to “further the overriding objective by actively managing cases”
- CPR 1.4(2)(3) – which set out that the Court’s active case management included encouraging parties to use ADR if the court considers that ‘appropriate’
The Court’s decision is in keeping with the broader objectives of the Civil Procedure Rules (CPR) and the overriding objective to ensure cases are dealt with justly and at proportionate cost.
In encouraging ADR, the Court is achieving these aims by offering litigants a potentially faster and less expensive alternative to traditional court proceedings.
The Right to a Fair Trial
It is important to note that the Court’s power to compel ADR is not an absolute power. Any order for ADR must respect a party’s right to a fair trial under Article 6 of the European Convention on Human Rights (ECHR).
The precedents considered in coming to this decision included: Ashingdane v United Kingdom, Tolstoy Miloslavsky v United Kingdom and Momcilovic and others v Croatia.
The Court stressed that any limitation on the right to trial must:
- Not impair the essence of the right to a fair trial, meaning the ADR process should not unfairly disadvantage or prejudice any party.
- Pursue a legitimate aim, meaning the decision to order ADR must be driven by a valid objective, such as promoting a fair, efficient, and cost-effective resolution.
- Be proportionate, meaning the benefits of ordering ADR, such as the potential for settlement, must outweigh any potential drawbacks, such as delays or costs.
This approach demonstrates that the Court is under a duty to exercise its authority judiciously.
Broader Implications
Despite Churchill being focussed on the Council’s internal complaints procedure, the decision has much broader implications.
The judgment suggests that courts could order stays for various forms of ADR, such as mediation, early neutral evaluation, or even informal negotiation, as long as the chosen process holds the potential to resolve the dispute.
This reflects the Courts’ growing recognition of the benefits of a move away from a rigid, adversarial approach to litigation towards a more flexible and solution-oriented system.
Practical Guidance for Litigators
Following this decision, litigators need to adopt a more strategic approach to ADR at a pre-action stage.
My recommendations are as follows:
- Consider ADR Early – Litigators should advise their clients to explore ADR options before filing proceedings. This should include a consideration of the different ADR methods possible, including any relevant internal complaints procedures where applicable.
- Have a robust explanation if you choose to refuse ADR – If your client chooses to refuse ADR, you must be prepared to provide the court with compelling reasons, as such decisions will be scrutinised, especially when parties are legally represented or there is a discrepancy in the parties respective resources.
- Understand that the Court does have a discretion – The application of this decision will be fact dependant. The Court will consider factors such as the nature of the dispute, the stage of the litigation, the parties’ conduct, and the specific method of ADR proposed.
Conclusion
Churchill v Merthyr Tydfil County Borough Council signifies a potential turning point, as the Court of Appeal’s decision signals a clear shift toward the Court’s promoting ADR.
If you would like more information regarding ADR, have a dispute you’d like advice upon, or wish to book Richard Gray, our qualified mediator, please contact us.
