The Court of Appeal has recently handed down its decision in the case of Churchill v Merthyr Tydfil County Borough Council (Churchill) which has implications for parties when considering whether to engage in alternative dispute resolution (ADR).
Churchill relates to the alleged incursion of Japanese Knotweed onto the claimant’s land from an adjoining Council property.
The claimant sent a letter of claim to the Council claiming for a reduction in the value of his property and loss of enjoyment. The Council responded to the claimant querying why he had not used the Council’s internal complaints procedure and advised that if the claimant issued proceedings without using the procedure, the Council would apply for a stay and costs. The claimant issued proceedings and the Council made the application.
The Court dismissed the Council’s application on the basis that it was bound by the decision of Lord Justice Dyson in the case of Halsey v Milton Keynes General NHS Trust  (Halsey) that “to oblige unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their rights of access to the Court”. Permission was granted to appeal and the Law Society, Bar Council, Civil Mediation Council, Centre for Effective Dispute Resolution, Chartered Institute of Arbitrators and Social Housing Law Association all made submissions to the Court as intervening parties.
Sir Geoffrey Vos, Master of the Rolls, gave the leading judgment in the Court of Appeal. He considered that the main issues which the Court had to resolve were as follows:
- Was the Judge right to consider that the decision in Halsey bound him to dismiss the application?
- If not, can the court lawfully stay proceedings for, or order, the parties to engage in a non-court based dispute resolution process?
- If so, how could the court decide whether to stay proceedings for, or order, the parties to engage in a non-court based dispute resolution process?
- Should the Judge have granted the Council’s application to stay the proceedings to allow the claimant to pursue the Council’s complaint procedure?
In considering whether the Judge was bound by the decision in Halsey, the Court of Appeal considered whether the relevant paragraphs in Halsey were a necessary part of the reasoning that led to the decision in the case (ratio decidendi) or, in fact, obiter. At paragraphs nine and ten of the decision in Halsey, Dyson LJ ultimately stated that it would be wrong for the Court to compel a party opposed to ADR to embrace it. The Court of Appeal found that Dyson LJ’s reasoning in Halsey, as to whether the Court had power to mandate ADR, was not a necessary part of the reasoning that led to the decision and was therefore obiter. As such, the Judge was not bound by this part of the judgment.
The Court of Appeal went on to assess whether the Court can lawfully stay proceedings for the parties to engage in a non-court based process. The Court found that whilst it does have the power to stay proceedings for the parties to engage in a non-court based process, the power must be exercised so that it does not impair the very essence of the claimant’s Article 6 of the Human Rights Act (HRA) 1998 (right to a fair trial). Rather, it must be in pursuit of a legitimate aim, and used in such a way that it is proportionate to achieving the legitimate aim.
The Court of Appeal, however, refused to lay down fixed principles as to the relevant factors in determining whether the alternative process is appropriate. It was said to be undesirable to provide a checklist and it was considered that Judges would be well placed to decide whether a particular ADR process would “bring about a fair, speedy and cost effective solution to the dispute and the proceedings, in accordance with the overriding objective”.
Finally the Court considered whether the Judge should have granted a stay in the proceedings between the Council and the claimant. The Court briefly considered the merits of the Council’s internal complaints procedure and found that it may not be the most appropriate process given the specific nature of the dispute, the respective position of each party and that a stay was unlikely to move matters forward. The parties were, however, encouraged to consider whether they could agree a temporary stay for mediation or some other form of non-court based adjudication.
The implications of this decision will impact all those involved in civil proceedings. In principle, civil courts have the power to stay proceedings whilst a non-court settlement process is undertaken such as a complaints procedure. It is, of course, too early to say how judges will exercise their discretion.
Sir Vos previously made clear the direction of travel regarding ADR, stating that: “ADR should no longer be viewed as ‘alternative’ but as an integral part of the dispute resolution process; that process should focus on resolution rather than dispute.” The Court of Appeal’s decision aligns with ethos.
Whilst the Court of Appeal found that the Court does have the power to stay proceedings or order the parties to engage in a non-court based adjudication, this power is curtailed to the extent that that it must not impair the claimant’s right under Article 6 of the HRA and the process must be appropriate for the dispute between the parties. It therefore remains the case that a party which has a legitimate reason for not engaging in a non-court based adjudication may be able to oppose such a stay and/or order.
Each case will be considered on its own facts and parties will need to consider the merits of the particular ADR process. Any party who chooses not to engage in any form of non-court based adjudication will need to be able to justify that position in light of the Court of Appeal’s decision and its approval of non-court based adjudication generally.