Churchill: the Court does have power to order a stay to attempt settlement

In the most significant case regarding the relationship of the courts and out of court dispute resolution for almost 20 years, the Court of Appeal this week handed down a significant decision.

Until now, the seminal case on the topic was Halsey v Milton Keynes General NHS (2004) which established that the Court could make a costs order against a party that had unreasonably refused ADR – even if they ultimately succeeded in their case. The decision was important in changing the culture of ADR not being seen as a sign of weakness in a case when proposed by a party. The Court in Halsey fell short of saying that the Court had sufficient power to order a party to engage in ADR however.

Now, following the case of Churchill v Merthyr Tydfil Borough Council (2023), the position is established that the Court does have the power to lawfully order parties to court proceedings to engage in a ‘non-court-based dispute resolution process’ by ordering a stay while they do so. That is a significant development. This power must not impair a claimant’s right to a fair trial, the order made must be in pursuit of a legitimate aim (presumably resolving the dispute or at least part of it) and be proportionate to achieving that legitimate aim.

However, while the power may be established there may be devil in the detail that could lead to applications to the Court on a case by case basis – if parties do not agree to use such a process. The judgment states that ‘Whether the court should order or facilitate any particular method of non-court-based dispute resolution in a particular case is a matter of the court’s discretion, to which many factors will be relevant.’   

 Vos MR went on to say that the characteristics of the particular method of process being considered will be relevant to the exercise of the Court’s discretion. The merits and demerits of the process suggested will need to be considered by the Court in each case. However he did not believe that the Court can or should lay down fixed principles as to what will be relevant in determining those questions and it would be undesirable to provide a checklist or a score sheet for judges to operate.

The Court did refer to the existing Halsey factors as being likely to have some relevance – but other factors too may be relevant depending on all the circumstances, including the following that were raised in argument. The factors the Court may take into account are likely to include: the form of ADR; whether the parties are legally advised or represented; whether ADR is likely to be effective without such advice / representation; whether it is made clear to the parties that of they do not settle they were free to pursue their claim or defence; the urgency of the case and reasonableness of the delay caused by ADR; the costs of ADR relative to the resources and value of the claim; whether there is a realistic prospect of the claim being resolved through such a process; whether there is a significant imbalance in the parties’ level of resource, bargaining power or sophistication; the reasons given by a party for not wishing to mediate and the reasonableness and proportionality of the sanction if a party declined ADR in the face of an order of the Court.

So, while the judgment gives a clear shot in the arm to the further use of mediation and other processes in dispute resolution there is still scope for argument. Would offering mediation and then making an application to the Court for a stay to be put in place following an opponent’s refusal to do so be regarded by some as being a bit too keen to settle and take us back to the ‘sign of weakness’ argument? Time will tell.

The Churchill case was a timely opportunity for the MR to expound on his views as to how non-court-based dispute resolution should interact with litigation. The facts of the case itself, and the arguments raised in it in relation to the Claimant’s appeal, were perhaps not an ideal example of this interaction. The case itself concerned an internal complaints process (ICP) in relation to the potential treatment of Japanese knotweed. The Court of Appeal sidestepped whether the particular ICP in the case was appropriate.

Finally the use of the term ‘non-court-based’ dispute resolution process looks likely to be adopted more widely. There has been longstanding criticism of the use of the word ‘Alternative’. Perhaps ‘NCB’ will be the new ‘ADR’