Court of Appeal revisits its decision on mandatory ADR - Mr Churchill v Merthyr Tydfill County Borough Council

In a much-anticipated judgment, the Court of Appeal has returned to the question of mandatory non-court-based dispute resolution (or ADR, as most people still call it), which was previously considered by the Court of Appeal 20 years ago in Halsey[1].

Two principal questions were considered: does the Court have the power to order the parties in Court proceedings to engage in some form of ADR? If so, in what circumstances?

In determining that the Court does have that power, the judgment echoes the recent conclusion of the Civil Justice Council that mandatory ADR is not inconsistent with Article 6 of the European Convention on Human Rights (the right to a fair trial) and re-emphasises the court’s obligation under the Civil Procedure Rules to manage litigation cost-effectively. 

However, the Court refused to provide strict guidance as to when it would be appropriate for judges to exercise that discretionary power.

Background

Mr Churchill brought a nuisance claim against Merthyr Tydfil County Borough Council for damages relating to the discovery of Japanese knotweed in his garden which, he alleged, had originated on the Council’s neighbouring land. The Council denied liability and applied for a stay of proceedings on the basis that Mr Churchill had failed to utilise its internal complaints process. 

The trial judge refused the application on the basis that the Court of Appeal judgment in Halsey precluded mandatory ADR.  In Halsey, the Court of Appeal had said that, whilst parties should be encouraged to use ADR (where appropriate), making it compulsory would be a barrier to “the right of access to the court”[2] and Article 6 of the European Convention on Human Rights, which provides that citizens have a right to a “fair and public hearing within a reasonable time by an independent and impartial tribunal established by law”[3].

The shifting landscape

Despite the Court’s view in Halsey, there has been a notable recent push for parties to engage in ADR before proceeding to trial. In June 2021, the Civil Justice Council published its views on compulsory ADR, which concluded that parties can be compelled to take part in ADR, including mediation, and that, in many cases, this would be desirable and effective. 

On 25 July 2023, the Ministry of Justice confirmed that mediation would be made compulsory in all specified money claims up to £10,000.

The Master of the Rolls, the Right Honourable Sir Geoffrey Vos, who delivered the leading judgment in Churchill, has repeatedly emphasised the central role he considers ADR has in the wide-ranging Civil Justice Reform programme he is leading, regarding it as a key tool to reduce pressure on an overburdened and expensive Court system.

The decision

It was found that those sections of the Halsey judgment which addressed the question of whether or not the Court had the power to order parties to engage in ADR (concluding that it neither had the power nor would it be desirable to impose it on reluctant parties), were obiter. They were not a necessary part of the Court’s reasoning which led to its judgment. As such, they were not binding.

This finding neatly side-stepped what had been regarded as a major obstacle to increasing the use of ADR.

It was found that Courts do have the power to order parties to engage in ADR, provided the power is exercised in a way that does not impair “the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.”[4]

However, the Court declined to provide any ‘fixed principles’ as to what were relevant considerations for a judge when assessing whether to order parties to engage in ADR. Approving reference was made to various factors proposed by the Bar Council, which included the particular form of ADR being considered, the urgency of the case and the reasonableness of the delay ADR would cause, but no checklist would be provided.

It was for judges to consider all relevant circumstances when determining whether ADR ought to be imposed and the reasonableness or otherwise of a party’s refusal to engage, as they were “well qualified to decide whether a particular process is or is not likely or appropriate for the purpose of achieving the important objective of bringing about a fair, speedy and cost-effective solution to the dispute and the proceedings, in accordance with the overriding objective.”[5].

Having determined the key principle, Mr Churchill’s case was remitted to the County Court for a decision on the merits of the Council’s internal complaints procedure and whether it would be appropriate to compel him to engage with it.

Comment

With this judgment, the Court of Appeal has put a rocket behind ADR, removing at a stroke what was considered the limiting power of Halsey and underlining the obligation Courts have to manage litigation efficiently under the Civil Procedure Rules.

The drive to limit the use of Courts as a mechanism for resolving legal disputes continues.

However, in declining to set fixed reference points for judges when considering whether or not to flex their now unfettered ADR muscles, a likelihood of fresh disputes over when ADR might be appropriate, and what sanctions ought to be imposed on those who unreasonably refuse invitations to engage in ADR, seems to have been created.

^[1] Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576

^[2] Dyson LJ at [9]

^[3] Para. 1

^[4] 2023] EWCA Civ 1416, [74]

^[5] James Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, [66]