England and Wales.: Court of Appeal confirms that courts can order parties to engage in ADR
Speed Read
In a decision handed down late last year, in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, the Court of Appeal of England and Wales (the Court) has held that courts can order parties to engage in alternative dispute resolution (ADR), provided that this (i) does not impair the essence of the claimant’s right to a fair trial; and (ii) is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.
The more complex question is determining when such orders should be made. On this point, the Court declined to lay down fixed principles, preferring to leave this as a matter of discretion. It is clear, however, that the nature of the proposed ADR process will be relevant, as well as other factors, depending on all the circumstances of each case.
While Churchill relates to ADR generally, its impact is expected mostly to be seen in courts ordering parties to attend mediation. In Ireland, mediation has statutory footing under the Mediation Act 2017 (the Act). The Act defines mediation as a “voluntary process” and provides that: “Participation in mediation shall be voluntary at all times.”
The Act allows the court, on the application of a party or of its own motion, to invite parties to consider mediation. But the court cannot order parties to attend mediation. Rather, the Act allows the court, when making costs awards, to have regard to whether a party unreasonably refused to consider or attend mediation following an invitation from the court to do so. There are risks for parties who unreasonably refuse to engage in mediation but, as Ms Justice Butler commented in I.E.G.P. Management CLG v Cosgrave [2022] IEHC 175, the “real bite” of the Act lies in the court’s power to make costs awards against those parties.
Background
The claimant, Mr Churchill, bought a property in Merthyr Tydfil. The defendant, Merthyr Tydfil County Borough Council (the Council), owned the neighbouring land. Mr Churchill claimed that Japanese knotweed had encroached from the Council’s land causing damage and loss. When Mr Churchill complained in 2020, the Council queried why he had not used its internal complaints procedure. The Council warned Mr Churchill that if he issued proceedings without doing so, the Council would apply for a stay. Despite that warning, Mr Churchill issued proceedings and the Council duly applied for a stay.
At first instance, Deputy District Judge Kempton Rees (the Judge) held that he was bound to follow Dyson LJ’s statement in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 (Halsey) 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”. The Judge therefore refused to stay the proceedings to allow Mr Churchill to complete the Council’s complaints procedure, despite finding that Mr Churchill and his lawyers had acted unreasonably by failing to engage with this procedure.
The Council appealed and giving the leading judgment of the Court, Sir Geoffrey Vos MR held that Dyson LJ’s statement in Halsey was not a necessary part of that case’s reasoning and was therefore not binding on the lower court. Vos MR then turned to consider the central issue on appeal: whether courts can lawfully stay proceedings for, or order, parties to engage in ADR.
The key question underpinning this issue was whether such orders are contrary to a litigant’s right to a fair trial under Article 6 of the European Convention on Human Rights. After considering European Court of Human Rights cases, pre-Brexit Court of Justice of the European Union cases and domestic English cases, Vos MR held that courts can lawfully order parties to court proceedings to engage in ADR, or stay the proceedings to enable the parties to engage in ADR, provided that the order made: (i) does not impair the essence of the claimant’s right to a fair trial; and (ii) is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.
Having found that such a power exists, Vos MR then considered how it should be exercised. On this point, Vos MR declined to lay down fixed principles, preferring to leave this as a matter of discretion rather than “a checklist or score sheet for judges to operate.” However, Vos MR did comment that the nature of the proposed ADR process will be relevant and indicated some non-exhaustive factors likely to be relevant, including:
- whether the proposed ADR allows for legal representation;
- whether it is made clear that if ADR fails, it is open to parties to pursue their claim or defence;
- the urgency of the case and limitation issues;
- the costs of ADR and the proportionality of these costs; and
- whether there are realistic prospects of the claim being resolved, for example, when there has already been an unsuccessful attempt at ADR.
Ultimately, in Churchill, the Court declined to order a stay because there would be little to be gained in doing so. Instead, the Court remitted the case back to the County Court to determine the merits of the Council’s complaints procedure. As a final comment, however, Vos MR encouraged the parties to consider agreeing on a temporary stay to allow for mediation or another form of ADR to take place.
Comment
Mediation is becoming increasingly popular in Ireland. The Act emphasises the significant role of mediation in resolving disputes, including by requiring solicitors to advise all clients engaged in litigation to consider mediation as a means of resolving their dispute. Yet the Act also makes it clear that mediation is a voluntary process: parties can be invited and even strongly encouraged – but not compelled – to engage in mediation.
While Churchill is unlikely, at least in the short term, to lead to changes to this position in Ireland, it may bring increased focus on the important role of ADR generally and, in particular, the potential costs consequences for parties who unreasonably refuse to engage in mediation when invited to do so by the court. It will also be interesting to observe the general levels of engagement from parties in England and Wales who are ordered to attend ADR processes against their will and the success rates of those ADR processes.
For more information, please contact Sarah Murphy, Partner, Paula Gibbs, Senior Associate, Simon Barber, Lawyer, Orla Clayton, Knowledge Consultant, Rachel Kemp, Knowledge Lawyer or your usual A&L Goodbody Disputes and Investigations team contact.
Date published: 9 January 2024