In December 2023, the Court of Appeal ruled in the case of Churchill v Merthyr Tydfil County Borough Council that they can make an order for parties to engage in non-court dispute resolution and to stay any proceedings for such purpose.

This decision marks a significant step in courts managing claims and, where appropriate, making parties attend a form of alternative dispute resolution (ADR), such as mediation, to see if the dispute can be resolved without encroaching further on the court’s time.

By way of background, Mr Churchill purchased a house in Merthyr Tydfil and noticed that Japanese Knotweed was growing in the garden. The knotweed was coming from a neighbouring property, owned by the Council, who had indeed treated the neighbouring property some years earlier. The Council invited Mr Churchill to enter into their internal complaints procedure in order to try to resolve the dispute.

Mr Churchill did not want to follow the internal complaints procedure and instead issued court proceedings. The Council applied to the Court to request that the claim was stayed and to compel Mr Churchill to follow the internal complaints procedure first.

At the first trial, the judge believed he was compelled to follow reasoning previously set out in the Court of Appeal decision of Halsey v Milton Keynes General Hospital NHS Trust from 2004, where the Court confirmed that it would be a breach of Article 6 of the Human Rights Act to compel parties to take part in ADR. However, the Court did rule that Mr Churchill and his solicitors had acted unreasonably in not following pre-action procedures and allowed the Council to appeal.

The Practice Direction for Pre-Action Conduct, which was the relevant pre-action protocol for this case, stated that before issuing proceedings parties should have: (i) exchanged sufficient information, (ii) tried to settle the claim without issuing proceedings, (iii) considered some form of ADR, and (iv) reduce the costs of litigation. Litigation should be considered a last resort.

The Practice Direction also stated that a party’s failure to comply with the Practice Direction could result in sanctions (usually in the form of a costs order) or for proceedings to be stayed whilst steps are taken for parties to comply.

The case attracted quite a lot of attention from various legal bodies, including the Law Society and the Bar Council, who were able to make their own submissions before the Court as intervening parties.

In the leading judgment, the Master of the Rolls, Sir Geoffrey Vos, concluded that:

The Court can lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made 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.

The Court did not define what a ‘non-court-based dispute resolution process’ would include, but most practitioners believe that this would include a wide range of options, such as mediation, round table meetings, without prejudice discussions or non-binding expert determinations. It will be up to the parties themselves to determine what the most appropriate form should be, taking into account the costs involved, the stage of the proceedings and the nature of the dispute itself.

Similarly, the Court of Appeal refused to set down a fixed set of principles and said the decision to stay proceedings or not would be determined on a case-by-case basis. They did however provide details of relevant factors which could be taken into account by a Court when deciding whether to stay the claim or not. These included, but were not limited to:

• Whether the process being considered is appropriate and likely to be effective and offer a suitable form of resolution to the dispute;

• Whether the process allows for the parties to recover their associated costs and to be legally represented;

• Whether the process is suitable given the urgency of the case and any limitation issues;

• Whether the process allows for the parties to continue to pursue the claim through the courts if it is not successful;

• Whether there is a significant imbalance in the resources of the parties and their respective bargaining powers;

• Consideration of the reasons given by a party for refusing to engage in ADR, such as previous failed attempts.

Despite the Court of Appeal deciding they had the power to stay proceedings on the facts of Mr Churchill’s case, they refused to do so in this instance. This was due to the fact that the Court of Appeal felt that too much time had passed since the original claim by the Council and also that the Council’s own complaints procedure was not appropriate, as it was intended to be used by parties prior to the issue of proceedings, a stage which had long passed in Mr Churchill’s case.

The decision of the Court of Appeal is perhaps not surprising. Mediation, via the Small Claims Mediation Service is already compulsory in non-injury claims of under £10,000 and this could be extended to both housing and personal injury claims.

With the Courts already stretched to breaking point and the length of time it now takes for a case to reach trial at its highest ever point, the decision can only assist Courts in trying to deal with the backlog of cases and reduce the number of claims actually going to trial.

However, the lack of formal principles could in fact lead to further litigation to determine whether a particular cases fits within those category of cases where a stay for ADR can now be ordered by the Court.

Notwithstanding this, however, it is certainly the case that mediation and other forms of ADR do have high success rates, with many cases settled either at the mediation itself or shortly afterwards. The lower costs of ADR and the quicker turnaround still mean that it is likely to be attractive to parties who have a real desire to want to resolve their case rather than go through the uncertainty, slower timeframes and higher costs of a formal court trial.