- The Court of Appeal in Churchill v Merthyr Tydfil County Borough Council confirmed that courts can order parties to engage in alternative dispute resolution (ADR) if it is proportionate and does not impair the claimant's right to a judicial hearing
- Courts will consider the effectiveness of ADR, the ability of parties to have legal representation, reasons for opposing ADR, clarity on continuing legal claims post-ADR, and urgency of the case
- Although not binding, this decision is likely to influence Guernsey courts to encourage or mandate ADR to resolve disputes early and reduce legal costs
The importance of Alternative Dispute Resolution in Guernsey – Churchill v Merthyr Tydfil County Borough Council
May 14, 2024
KEY TAKEAWAYS:
In England & Wales proceedings are subject to a series of "Pre-Action Protocols" which set out the steps a Court would expect parties to take prior to commencing proceedings.
The Pre-Action Conduct and Protocols applies to certain proceedings (the "Protocol"). The Protocol provides that the Court will "expect the parties to have exchanged sufficient information to - … (c) try to settle issues without proceedings; (d) consider a form of Alternative Dispute Resolution (ADR) to assist with settlement;… (f) reduce the costs of resolving the dispute". The Protocol goes on to state that "…litigation should be a last resort…" and "parties should consider whether negotiation or some other form of ADR might enable them to settle their dispute without commencing proceedings'".
In Guernsey, while we do not have any "pre-action protocols", the Royal Court Civil Rules 2007 (the "RCCR") does contain a similar provision to those contained within the Protocol. However, it not as detailed and comes into play only once proceedings have been issued. Rule 38 of the RCCR provides that, as part of the Court's duty to manage cases, the Court's active case management includes "… (e) encouraging the parties to use any appropriate form of alternative dispute resolution and facilitating the use of such procedures…" In practice, the Royal Court, where it deems it appropriate, may provide a strong judicial steer to the parties to consider and/or to use alternative dispute resolution.
It is already well established that an unreasonable refusal to engage in ADR may have costly consequences.
While these provisions encourage parties to legal proceedings to consider and/or engage in ADR, they do not place an obligation on the parties to do so. It has been held that this is because "…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" (see Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 WLR 3002) ("Halsey")).
The question whether a court can lawfully order the parties to court proceedings to engage in non-court based dispute resolution (and if so, in what circumstances) was recently considered at length in the decision of Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416.
Background facts and first instance decision
Mr Churchill bought a property at 9 Gellifaelog Terrace, Penydarren, Merthyr Tydfil, CF47 9HL (the "Property") in 2015. The Council owns adjoining land (the "Land") to the east of the property. Mr Churchill claimed that, since 2016, Japanese knotweed has encroached from the Land onto the Property causing damage to it, a reduction in its value and loss of enjoyment. Mr Churchill’s solicitors sent the Council a letter of claim on 29 October 2020, to which the Council responded on 20 January 2021. The Council’s response queried why Mr Churchill had not made use of its Corporate Complaints Procedure. It said that, if Mr Churchill were to issue proceedings without having done so, the Council would apply to the court for a stay and for costs. Despite that warning, Mr Churchill issued proceedings in nuisance against the Council in July 2021. On 15 February 2022, the Council duly issued the stay application, as it had threatened.
Deputy District Judge Kempton Rees (the "Judge") dismissed the stay application, holding that he was bound to follow Dyson LJ’s statement in Hasley (quoted above). The Judge also held that Mr Churchill and his lawyers had acted unreasonably by failing to engage with the Council’s complaints procedure. That conduct was contrary to the spirit and the letter of the relevant pre-action protocol. In August 2022, permission to appeal was granted and the matter was referred to the Court of Appeal on the grounds that it raised an important point of principle and practice and that there were many other similar cases.
Should a Court order parties to engage in a non-court based dispute resolution process?
Following a careful consideration of domestic and European Union case law in relation to the right to access to court (see paragraphs 26 – 49), the Court of Appeal concluded that:
"…as a matter of law, the court can lawfully stay existing proceedings for, or order, the parties to engage in a non-court based dispute resolution process". The Court of Appeal went on to state however that an order of this nature should only be made if 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".
In reaching this conclusion, the Court of Appeal declined to "provide a checklist or a scores sheet for judges to operate", but did indicate that, whether or not the Court should exercise its discretion, the following factors might be relevant:
1.Whether the proposed non-court based dispute resolution would be effective, appropriate and whether there was any realistic prospect of the dispute being resolved by the proposed process;
2.Whether the proposed dispute resolution allowed the parties to have legal representation and recover any associated costs (so as to avoid any significant imbalance between the parties);
3.The reasons given by the parties for opposing any proposal to consider and/or engage in a non-court based dispute resolution process;
4.Whether it was clear to the parties that should they engage in a unsuccessful non-court based dispute resolution process that they would still be able to pursue their claim or defence; and
5.The urgency of the case and whether the delay will give rise to limitation issues.
Final comments
Although this decision does not bind the Guernsey Court's it will prove to be persuasive when faced with a similar issue. It might also be seen as another step (in legal proceedings) to put more pressure (perhaps even an obligation) on the parties to proceedings to use ADR in the first instance rather than the courts. However it clear that there will be a level of difficulty in balancing the need to resolve disputes at an early stage and before legal costs are escalated, and the delay to a specific case a requirement to engagement in ADR might cause.
In Guernsey, while we do not have any "pre-action protocols", the Royal Court Civil Rules 2007 (the "RCCR") does contain a similar provision to those contained within the Protocol. However, it not as detailed and comes into play only once proceedings have been issued. Rule 38 of the RCCR provides that, as part of the Court's duty to manage cases, the Court's active case management includes "… (e) encouraging the parties to use any appropriate form of alternative dispute resolution and facilitating the use of such procedures…" In practice, the Royal Court, where it deems it appropriate, may provide a strong judicial steer to the parties to consider and/or to use alternative dispute resolution.
It is already well established that an unreasonable refusal to engage in ADR may have costly consequences.
While these provisions encourage parties to legal proceedings to consider and/or engage in ADR, they do not place an obligation on the parties to do so. It has been held that this is because "…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" (see Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 WLR 3002) ("Halsey")).
The question whether a court can lawfully order the parties to court proceedings to engage in non-court based dispute resolution (and if so, in what circumstances) was recently considered at length in the decision of Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416.
Background facts and first instance decision
Mr Churchill bought a property at 9 Gellifaelog Terrace, Penydarren, Merthyr Tydfil, CF47 9HL (the "Property") in 2015. The Council owns adjoining land (the "Land") to the east of the property. Mr Churchill claimed that, since 2016, Japanese knotweed has encroached from the Land onto the Property causing damage to it, a reduction in its value and loss of enjoyment. Mr Churchill’s solicitors sent the Council a letter of claim on 29 October 2020, to which the Council responded on 20 January 2021. The Council’s response queried why Mr Churchill had not made use of its Corporate Complaints Procedure. It said that, if Mr Churchill were to issue proceedings without having done so, the Council would apply to the court for a stay and for costs. Despite that warning, Mr Churchill issued proceedings in nuisance against the Council in July 2021. On 15 February 2022, the Council duly issued the stay application, as it had threatened.
Deputy District Judge Kempton Rees (the "Judge") dismissed the stay application, holding that he was bound to follow Dyson LJ’s statement in Hasley (quoted above). The Judge also held that Mr Churchill and his lawyers had acted unreasonably by failing to engage with the Council’s complaints procedure. That conduct was contrary to the spirit and the letter of the relevant pre-action protocol. In August 2022, permission to appeal was granted and the matter was referred to the Court of Appeal on the grounds that it raised an important point of principle and practice and that there were many other similar cases.
Should a Court order parties to engage in a non-court based dispute resolution process?
Following a careful consideration of domestic and European Union case law in relation to the right to access to court (see paragraphs 26 – 49), the Court of Appeal concluded that:
"…as a matter of law, the court can lawfully stay existing proceedings for, or order, the parties to engage in a non-court based dispute resolution process". The Court of Appeal went on to state however that an order of this nature should only be made if 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".
In reaching this conclusion, the Court of Appeal declined to "provide a checklist or a scores sheet for judges to operate", but did indicate that, whether or not the Court should exercise its discretion, the following factors might be relevant:
1.Whether the proposed non-court based dispute resolution would be effective, appropriate and whether there was any realistic prospect of the dispute being resolved by the proposed process;
2.Whether the proposed dispute resolution allowed the parties to have legal representation and recover any associated costs (so as to avoid any significant imbalance between the parties);
3.The reasons given by the parties for opposing any proposal to consider and/or engage in a non-court based dispute resolution process;
4.Whether it was clear to the parties that should they engage in a unsuccessful non-court based dispute resolution process that they would still be able to pursue their claim or defence; and
5.The urgency of the case and whether the delay will give rise to limitation issues.
Final comments
Although this decision does not bind the Guernsey Court's it will prove to be persuasive when faced with a similar issue. It might also be seen as another step (in legal proceedings) to put more pressure (perhaps even an obligation) on the parties to proceedings to use ADR in the first instance rather than the courts. However it clear that there will be a level of difficulty in balancing the need to resolve disputes at an early stage and before legal costs are escalated, and the delay to a specific case a requirement to engagement in ADR might cause.
Sarah Brehaut
Partner/Guernsey
