On 29 November 2023 the Court of Appeal handed down its judgment in the case of Churchill v Merthyr Tydfil County Borough Council. The judgment confirmed that the courts do have the power to compel a party to engage in Alternative Dispute Resolution (ADR).  This significant judgment has the potential for far-reaching implications and marks a shift towards compelling litigants to engage in ADR.

Whilst there has been a trend over the years to encourage parties to consider ADR – with the possibility of being penalised on costs at trial if ADR has not been considered – it has long been an established principle that litigants do have a general right to proceed with matters purely through the courts.  The Court of Appeal remarked in Halsey v Milton Keynes General NHS Trust [2004] that compulsory ADR would be an "unacceptable obstruction to the right of access to the court".  In addition, in Halsey, it was held that compelling a party to mediate could amount to a breach of the European Convention of Human Rights. 

In England & Wales, mediation is not (currently) compulsory in multi-track civil claims, but parties are expected to have in mind the benefits of ADR.  Indeed, the overriding objective of the Civil Procedure Rules, which govern the course of civil proceedings, provides that litigants and courts should deal with cases "justly and at proportionate cost".

Background to the dispute

The case in question concerned a claim in nuisance by Mr Churchill resulting from a Japanese knotweed encroachment on his land from the Council's adjoining land. Mr Churchill brought a claim against the Council for the damage caused to his property, and also for the diminution in the value of his property, as result of the knotweed. 

The Council argued that Mr Churchill should first have used the Council's internal complaints procedure before issuing court proceedings. This resulted in the Council applying to the Court for a stay of proceedings, so that the parties could engage in the internal complaints procedure.

The Judge at first instance noted that whilst Mr Churchill had acted unreasonably in refusing to engage in the Council's complaints procedure, the Court did not have the power to stay proceedings and compel the parties to mediate. 

Court of Appeal Judgment

The case was appealed and the unanimous decision from the Court of Appeal was that the previous decision in Halsey was not binding, and that the Court can order that proceedings are stayed and compel parties (in certain situations) to engage in ADR.

It is important to note engaging in ADR does not prevent a dispute from proceeding to trial.  Instead, exploring options in connection with ADR, will place a stay on proceedings whilst parties consider if they can settle the dispute outside of court. 

Considerations

Litigants and practitioners will need to meaningfully consider and engage with ADR in the context of the dispute.  How and when the courts will exercise their powers in this regard is yet to be seen, but it is apparent from the judgment that fixed principles will not be forthcoming and that each case will be decided on its merits. The current position, following Churchill, is that the courts can order a stay of proceedings, in situations where:

1. It would not impair the very essence of the claimant’s right to a fair trial;
2. It is in pursuit of a legitimate aim; and
3. It would be proportionate to achieving that legitimate aim.

When considering ADR in the context of a civil dispute, if the answer to the above questions is yes, it is highly likely that ADR will be compulsory precursor to court proceedings. 

Of course, not all cases will be considered by some or all of the parties to be suitable for certain forms of ADR, including mediation. Some parties may not wish to incur the additional costs of having to deal with the ADR process, in addition to the costs of litigation through the courts, even where there is a possibility that the claim may settle. 

It will be important for a party wishing to resolve their dispute via the courts to bear in mind that they may be compelled to undertake ADR and that they will need cogent and well-considered reasons for not doing so. 

It remains to be seen how litigants' engagement with the ADR process will change given this development in the courts' approach. However, ADR remains an important consideration and due regard should be given to it at each stage of the dispute.