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19.12.24

How the landscape in relation to ADR has changed in 20 years

In 2004, in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, the Court of Appeal prescribed six criteria for determining whether a refusal to mediate would be taken into account in any costs decision.  In doing so, they also remarked that the courts could not and should not compel parties to mediate: [9]…to oblige unwilling parties to refer their disputes to mediation would unacceptably obstruct their right of access to the Court.”  We previously wrote about the Halsey decision which can be found here.

Nearly 20 years on from that decision and the landscape has changed.  In Churchill v Merthyr Tydfil [2023] EWCA Civ 1416, the Court of Appeal confirmed that they could order parties to engage in alternative forms of dispute resolution (“ADR”).

What happened in Churchill?

Following purchase of a home in Merthyr Tydfil, Mr Churchill noticed Japanese Knotweed growing in his garden.  The Council, acknowledged that they had previously treated Japanese Knotweed on neighbouring land that they owned and Mr Churchill sought compensation for losses he had incurred due to the Japanese Knotweed.

The Council, whilst denying liability, referred Mr Churchill to their internal complaints procedure.

Mr Churchill chose, instead of raising a complaint through the Council’s internal complaints procedure, to commence court proceedings.  The Council applied for a stay of the proceedings on the basis that Mr Churchill ought to have attempted to resolve matters by utilising the Council’s internal complaints procedure.

At first instance, the court refused the Council’s application on the basis that they were bound to follow the Court of Appeal’s Judgment in Halsey (i.e. that they could not compel ADR).  The Council appealed the decision.

Court of Appeal’s decision

The Court of Appeal concluded that statements made in Halsey in relation to the Court obstructing a party’s right of access to the Court if they were obliged to refer disputes to mediation were obiter (i.e. in passing, rather than an integral part of their decision. and therefore not binding).  The decision in Halsey was based on the issue of costs sanctions for failure to engage in ADR and therefore the Court at first instance was wrong to conclude that they were bound by the Halsey decision (insofar as it related to the point as to whether the Court could order parties to engage in ADR).

A point addressed by the Court of Appeal in Churchill was whether the Court could stay proceedings for the parties to engage in non-court based ADR or order the parties to engage in the same.  The Court of Appeal held that they could lawfully do so on the proviso that the making of such an order would not impair on a Claimant’s right to proceed to trial and that such an order would be proportionate (that the claim could be resolved fairly, quickly and at reasonable cost).  Hence the Court would have to mindful of the Claimant’s rights and whether the form of ADR proposed would be proportionate (which would be considered on a case-by-case basis) before making such an order, but they were not blanketly precluded from making such an order (as was determined by the Court at first instance in Churchill).

In the event, despite confirming the power existed, the Court of Appeal declined to stay the Churchill claim holding that it was no longer appropriate as matters (in the claim) had moved on.

Effect of the Churchill decision

On 1 October 2024, Parts 1, 3, 28, 29 and 44 of Civil Procedure Rules (“CPR”) were amended to reflect the Churchill decision and recognise that the Court can order ADR and should consider “promoting or using alternative dispute resolution” as part of the overriding objective (which enables the Court to deal with cases justly and at proportionate cost”) and order or encourage the parties to use ADR as part of the Court’s case management powers.

The Churchill decision and the subsequent amendments to the CPR highlights the importance that the Court places on ADR and reinforces the message to parties who are contemplating litigation to actively explore ADR prior to commencing proceedings, and indeed once proceedings have been commenced, because failure to do so could not only result in court mandated ADR, but will likely lead to some form of costs sanctions for the party who has refused to engage (CPR 44.2(5)(e)).

It cannot be underestimated how important ADR can be to either resolving a dispute or at least narrowing issues between the parties.  ADR can take various forms such as mediation, round table meetings and even a “without prejudice” phone call between the parties or their representatives.  ADR is not onerous and it would be a very unwise litigant who would, in the face of the Court’s clear stance on the importance of ADR, refuse to engage in the same.  Moreover, ADR has a high success rate and can considerably reduce the cost of legal proceedings, whilst eliminating risk and delay, as well as the stress and inconvenience placed on litigants and witnesses.

 

If you require advice and/or representation in respect of high value civil proceedings, contact our civil litigation solicitors by sending us an emailcompleting our online enquiry form or calling on 020 3813 5366.


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Articles are intended as an introduction to the topic and do not constitute legal advice.