Churchill v Merthyr Tydfil: Can the Court Lawfully Compel Unwilling Parties to Take Part in Non-Court-Based Dispute Resolution?

At a Glance

• Lord Justice Dyson’s 2004 judgment in Halsey v Milton Keynes General NHS Trust stated that “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.”
• Having considered recent case law, including from the European Court of Human Rights, the Court of Appeal held that courts can lawfully stay proceedings to order parties to engage in a non-court-based dispute resolution procedure, if it would not affect the claimant’s right to a judicial hearing and if the order is proportionate and made to settle the dispute fairly and quickly.
• The principle of “mandatory mediation” is gathering pace. In July, the UK government confirmed its policy to integrate mediation to small claims up to £10,000 in the County Courts, with plans to introduce this for higher-value claims in due course.

In a recent decision — Churchill v Merthyr Tydfil County Borough Council Appeal No: CA-2022-001778 — His Majesty’s Court of Appeal in England considered whether it was lawful to grant a stay of proceedings and order the parties to engage in a non-court-based dispute resolution process. Although the stay was refused in this particular case, the Court of Appeal held in its judgment that such an order would be lawful, in a departure from previous case law.

Background

The application to stay proceedings was issued by Merthyr Tydfil County Borough Council (the “Council”) in order to compel the claimant, Mr Churchill, to engage with the Council’s internal corporate complaints procedure. Mr Churchill had bought a property in 2015, and the Council owned the adjoining land. Mr Churchill claimed that Japanese knotweed had encroached onto his property from the Council’s land, causing damage and a loss of value and enjoyment. The Council informed Mr Churchill that if he were to issue proceedings without first using their internal complaints procedure then they would apply for a stay of proceedings. Despite this, Mr Churchill commenced proceedings, and the Council applied for the stay. 

The Halsey Judgment

At first instance, Deputy District Judge Kempton Rees dismissed the Council’s application and followed Lord Justice Dyson’s reasoning in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576. The Halsey judgment stated that “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.” Lord Justice Dyson asserted that whilst the court can encourage parties in the “strongest terms” to submit a dispute to mediation, it could not lawfully order them to do so. The judgment reasoned that a key factor in the effectiveness of alternative dispute resolution (ADR) procedures is that they are voluntary. Lord Justice Dyson held that compelling unwilling parties to engage in ADR may lead to no outcome other than an increase in the costs and time spent resolving the dispute.

Court of Appeal Judgment 

The Council was granted permission to appeal on the grounds that the case considered an important point of principle and practice. The Court of Appeal held that Lord Justice Dyson’s comments in Halsey were incidental to the main reasoning of the judgment and it was therefore not bound by the commentary. Having considered recent relevant case law, including from the European Court of Human Rights, the Court of Appeal held that the courts can lawfully stay proceedings to order the parties to engage in a non-court-based dispute resolution procedure. 

Such an order should only be granted if it would not affect the claimant’s right to a judicial hearing. The order should be proportionate and made in order to settle the dispute fairly, quickly and at a reasonable cost. The Court of Appeal declined to set out fixed principles that should be considered in these cases. Instead, the courts should have regard to all of the circumstances of the case in considering whether a particular ADR procedure is appropriate. In such an entrenched dispute, the Court of Appeal found that the Council’s internal complaints procedure would not be the most appropriate process to resolve the claim, and the stay was refused. 

Mandatory Mediation?

The principle of “mandatory mediation” is gathering pace. In July this year, the UK government confirmed its policy to integrate mediation to all small claims (valued up to £10,000) in the County Courts, with plans to introduce this for higher-value claims in due course.

As far as High Court litigation is concerned, parties are already encouraged to use ADR through the pre-action protocols and the overriding objective of the civil procedure rules. Of course, ADR takes many forms — from structured mediation to informal discussions. However, this decision marks a turning point in the role of the courts in directing the use of ADR in order to increase the efficiency of dispute resolution proceedings.