Court Ordered Dispute Resolution: Efficient Case Management or Impaired Access to Justice?

In a judgement handed down, on 29 November 2023, the Court of Appeal ("CA") ruled that a court has the power to stay proceedings and order parties to engage in alternative dispute resolution ("ADR"). Amendments to the civil procedure rules ("CPR"), made almost a year later, reflect the importance of this decision and the impact it is likely to have on parties involved in proceedings going forward.

Background

In July 2021, James Churchill (the “Claimant”) issued proceedings for nuisance against Merthyr Tydfil Council (the “Council”), following a claim that damage had been caused to his property by weeds, encroaching from the adjoining land (owned by the Council). The Council, having initially suggested the Claimant use their Corporate Complaints Procedure, applied to the Court for a stay of proceedings in February the following year. 

The application was dismissed in the County Court, as the Deputy District Judge felt bound by the reasoning in Halsey v Milton Keyes General NHS Trust [2004] 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.’

In August 2022, the Council was granted permission to appeal, and the matter was referred to the CA on the grounds that the conduct of the Claimant was contradictory to the ‘spirit and letter of the relevant pre-action protocol’. On this basis, the CA considered the following issues:

i. Whether the deputy district judge was right to think that Halsey bound him to dismiss the Council’s application for a stay of the proceedings;

ii. Whether it is lawful for the court to stay proceedings, or order parties to engage in dispute resolution outside of court.

With regard to the first issue, the CA decided that the passages in Halsey, which the district judge relied on, were ‘not part of the essential reasoning in that case’ and therefore did not bind the judge to dismiss the Council’s application. With regard to the second issue, the CA considered whether ordering parties to engage in non-court dispute resolution processes would interfere with their right to a fair judicial hearing; further whether this interferes with parties’ right to fair trial under Article 6 of the European Convention of Human Rights.

On this point, the CA considered domestic and European Court of Human Rights cases, to provide the following points of clarity:

i. The court could lawfully order parties to engage in dispute resolution, so long as the order does not impair the parties’ right to judicial hearing; and

ii. The order is proportionate to achieving the legitimate aim of a fair, quick and cost-effective settlement, in the spirit of the pre-action protocol.

Although, in the current case, it was decided that to order a stay so late in the proceedings would be of no merit, the judgment made clear that the application ought to have been allowed in the lower court. Therefore, the appeal was allowed in part and the parties were encouraged to consider whether they could agree to a temporary stay for some form of mediation.

Changes to the CPR

In addition to the above points, when providing judgement, the Master of the Rolls declined to ‘lay down fixed principles’ for when a court could order parties to engage in ADR. However, as of 1 October 2024, amendments to the CPR essentially put this decision into effect.

These amendments were made with specific application to:

i. The court's overriding objective to deal with cases justly and at proportionate costs (under Part 1); and

ii. The court's powers in relation to case management (under Part 3).

Under CPR 1.4(e), the duty of the courts now includes ‘ordering or encouraging the parties to use and facilitating the use of, alternative dispute resolution.’ This addition to the courts’ general powers could lead to an increased number of out-of-court settlements. There are several benefits to engaging ADR, such as:

i. Allowing parties to avoid lengthy and costly disputes in court, however still involves a neutral-third party in the form of a mediator;

ii. Allowing parties to establish trust, making a better basis for settlement; and

iii. Allowing for the maintenance of good-will, which can be particularly beneficial in cases involving valued commercial relationships.

However, given neither the CPR nor the CA in Churchill v Merthyr Tydfil, indicated when this power should be exercised, application of these procedural rules remains within the court's discretion. Therefore, the courts must carefully consider the specific circumstances and elements of each case to ensure an order for ADR will lead to a beneficial solution and will not interfere with parties’ rights to a fair, judicial hearing. 

If you have any queries about alternative dispute resolution and the impact of this recent decision, please do not hesitate to get in touch by telephone on 0207 052 3545 or by email info@kaurmaxwell.com

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice.

Please contact KaurMaxwell for advice before taking any action in reliance on it.