Welcome to the first edition of RED Alert of 2024
Also featuring in this month's update:
James Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416
Whether the courts can force litigants to negotiate outside the court process
Summary
The Court of Appeal considered the question of whether the court had jurisdiction to stay court proceedings in order to require the parties to mediate or engage in another form of alternative dispute resolution.
The facts
This question arose in context of proceedings brought by Mr Churchill following the purchase of a residential property in Merthyr Tydfil. The Defendant Council owned adjoining land and it was claimed by Mr Churchill that Japanese knotweed encroached from that land onto his property causing damage and reduction in its value and loss of enjoyment. This was essentially a claim in nuisance.
When Mr Churchill through his solicitors first set out his claim, the Council responded by asking why he had not made use of its corporate complaints procedure (Complaints Procedure). Mr Churchill ignored that question and continued to issue proceedings. In response the Council applied to the court to stay the proceedings to allow time for Mr Churchill to formally submit his claim through the Complaints Procedure.
This question was first considered by a deputy District Judge and then (after a High Court Judge gave permission to appeal) was re- considered by the Court of Appeal leading to this judgment.
Mr Churchill objected to the Complaints Procedure on the ground that it restricted his access to the court. The basis for this view included :
- there was no neutral third party involved considering the claim but was in fact dealt with by the Council's own employees
- no legal advice was available to Mr Churchill
- the process had no fixed timescale
- the limitation period was not suspended during the process
- there was no provision for the payment of Mr Churchill's costs during the process
- there was no provision allowing for payment of compensation.
Various other parties joined the proceedings as "Interveners" given the important question raised. These included the Law Society, the Bar Council, the Civil Mediation Council and the Centre for Effective Dispute Resolution who all advanced the view that the courts did have jurisdiction to stay proceedings and order the parties to engage in a non court-based dispute resolution process such as mediation.
The law
In the Court of Appeal case of Halsey v. Milton Keynes General NHS Trust [2004], Dyson LJ stated “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."
Furthermore, Article 6 of the ECHR provides as follows under the heading “Right to a fair trial”:
"In the determination of his civil rights and obligations …, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. …"
On the other hand, the Civil Procedure Rules (CPR) which govern the litigation process in England and Wales contain various provisions encouraging the parties to use alternative dispute resolution (ADR) including the following:
"[active case management includes] encouraging the parties to use an [ADR] procedure if the court considers that appropriate and facilitating the use of such procedure” [CPR 1.4(2)(e)]
The CPR also contain various protocols which parties are expected to follow prior to the issue of proceedings depending on the nature of the claim. If there is no specific protocol, then there is a general protocol which applies (General Protocol). This requires parties:
- to have exchanged sufficient information
- to try to settle the issues without proceedings
- to consider a form of ADR to assist with settlement.
The General Protocol also provides that if proceedings are issued the parties may be required to provide evidence that ADR has been considered and that a party’s refusal to participate in ADR might be considered unreasonable and lead to an order to pay additional costs.
When giving the directions, “[the court] will take into account whether or not a party has complied with [the General Protocol] and any relevant pre-action protocol” [CPR 3.1(4)]
Importantly, the General Protocol also says that the court may order the “proceedings are stayed while particular steps are taken to comply” with it.
The decisions
The Deputy District Judge concluded it was bound by the Halsey decision and specifically referred to the words of Dyson LJ (see above). Consequently, the proceedings were not stayed. However, the judge also stated that Mr Churchill had been unreasonable in failing to observe the Council's Complaints Procedure in light of the General Protocol.
It then rested on the Court of Appeal (CA) to fully review the case and the relevant law. This was an important principle to decide and that was illustrated by the number of the Interveners.
The CA first considered the Halsey decision. In that context it needed to consider whether the words used by Dyson LJ were part of the reasoning for the judgment and therefore binding or were they simply observations. After careful analysis, the CA considered the words had been taken out of context and that they were simply observations which did not lead to the actual reasoning of the decision in that case. Consequently, the Deputy District Judge was not in fact bound by the Halsey decision.
The CA then considered whether courts had jurisdiction to stay proceedings in order for the parties to engage in ADR especially in light of the importance of the right of access to the courts.
The CA concluded that there was a power to do so provided it did not affect the party's right to a judicial hearing and it was a proportionate means to achieve settlement fairly, quickly and at reasonable cost.
However, the CA declined to set out any parameters governing the exercise of that power. Indeed, the CA declined to order a stay of the proceedings in this case as nothing further would be gained from it.
Our comments
Perhaps not a surprising decision given the consistent approach of the courts to encourage ADR. It is, however, useful to have some clarity on this following the Halsey decision. It remains to be seen in what circumstances the courts will force parties to negotiate. It is perhaps more likely to impose cost sanctions on reluctant parties.
