In a landmark decision in James Churchill v Merthyr Tydfil County Borough Council, the Court of Appeal clarified the power of the court to lawfully stay proceedings to allow parties to engage in a non-court-based alternative dispute resolution process (ADR). This ruling not only sheds light on the significance of ADR but also affirms the court’s position in allowing, or ordering, parties to engage in a more collaborative and constructive resolution process.
The dispute arose in relation to the invasive Japanese Knotweed plant, which has become the centre of a number of nuisance claims. The claimant, Mr Churchill, claimed that the Japanese Knotweed plant had spread from the Council’s land onto his adjoining private property, causing damage and a loss of value and enjoyment. The council argued that the claimant should have considered ADR options, including its internal complaints procedure, prior to issuing proceedings. The Court of Appeal’s ruling in this case extends beyond the specific issue of Japanese Knotweed, addressing the broader procedural aspects of dispute resolution.
As the claimant did not use the Council’s internal complaints procedure prior to issuing proceedings as advised, the Council applied for a stay of proceedings to allow Mr Churchill to use the internal complaints procedure. The Council’s stay application was dismissed as the judge held that he was bound to follow the judgment in Halsey v Milton Keynes General NHS Trust (2004), which determined broadly that the court had no power to compel a party to engage with ADR.
Upon the case being brought to the Court of Appeal, it was subsequently decided, amongst other things, that:
- The passage of Dyson LJ’s judgment in Halsey v Milton Keynes General NHS Trust (2004) relied upon by the judge when dismissing the Council’s stay application, “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court”, had not bound the judge to dismiss the Council’s application for a stay of the proceedings; and
- the court could lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process.
Therefore, moving forward it appears that it will be open to the courts to exercise discretion in determining whether proceedings should be stayed to allow, or to order, the parties to engage in a non-court-based dispute resolution process. This is provided that such an order would not impair the claimant’s right to a judicial hearing and would be proportionate to achieving the legitimate aim of settling any dispute fairly, quickly and at reasonable cost.
This marks a further departure from the traditional approach of cases continuing through the adversarial court system without considering alternative avenues for resolution. A stay of proceedings could instead provide the parties with the opportunity to engage in processes like mediation or arbitration, fostering a more amicable and cost-effective resolution.
To further reflect this new focus, the Centre for Effective Dispute Resolution (CEDR) has launched a new cost-effective mediation scheme which is available for two party claims brought before the County Court where the financial value of the claim is £100,000 or less.
However, although ADR methods can be cost-effective, this only applies when the opportunity to participate in ADR is utilised correctly. When a party does not consider and engage in ADR where possible, there can be costs sanctions imposed on that party. For example, if a claimant refuses to engage with an invitation of ADR from the defendant, the court may make an adverse costs order against the claimant and order the parties to engage in a non-court-based dispute resolution process following the decision in James Churchill v Merthyr Tydfil County Borough Council.
The Practice Direction on Pre-Action Conduct and Protocols highlights the need for parties to consider ADR at all stages of a dispute and to treat litigation as a last resort. It also provides the court with the discretion to consider any non-compliance when giving directions for case management and awarding costs orders.
If you require advice and assistance please email or call our Dispute Resolution team on 0113 207 000.
