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The Court of Appeal handed down its decision in the Churchill v Merthyr Tidfyl case on 29 November 2023. The key decisions were: 1. The Court overturned Halsey v Milton Keynes General NHS Trust, the 20 year old case on refusal to mediate to a limited extent in saying that in appropriate circumstances parties can be mandated to mediate and 2. the Court did not decide whether an internal complaints system constituted ADR. The Court stopped short of mandating use of internal complaints processes.

Originally, the Deputy District Judge had held that he was bound to follow Dyson LJ’s statement in Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 WLR 3002 (Halsey) to the effect 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”. Accordingly, the judge refused to grant a stay of the proceedings to make Mr Churchill to pursue an internal complaints procedure operated by the Merthyr Tydfil County Borough Council (the Council). The Council appealed and this was what the Court of Appeal had to decide. Could the Court restrict Mr Churchill from proceeding if he hadn’t tried to use ADR as set out in the pre action protocol.

The decision potentially had far reaching consequences for all litigators and parties in a wide range of cases such as housing disrepair, negligence, trusts of land and inheritance being just a few of those.

In the end the Court of Appeal only allowed the appeal to a limited extent. To a degree, the issue was academic by the time it got to the Court of Appeal.

The Master of the Rolls said that “in these circumstances, whilst it is obvious that the judge would have stayed the claim back in May 2022, had he been able to see this judgment, things have moved on. There is little point in doing so now, since nothing will be gained if a one-month stay were granted as the Council seeks. This court cannot properly grant a mandatory injunction against Mr Churchill requiring him to allow the Council to treat his knotweed. That has been neither formally sought nor argued.
It is better in my judgment to allow the appeal to the extent already stated and to allow the merits and demerits of this particular internal complaints procedure to be resolved on another occasion.”

Nonetheless the decision still shines a light on the court’s authority to stay a claim or direct parties towards non-court-based dispute resolution, emphasising the need to engage in mediation or early neutral evaluation.

The Master of the Rolls, supported by the Lady Chief Justice and Lord Justice Birss, clarified that this power must be wielded cautiously to avoid impeding a party’s right to a fair trial under Article 6 of the ECHR.

The Court of Appeal highlighted considerations for courts when contemplating orders to stay cases for ADR or mediation. These factors encompass the cost, suitability of mediation for the dispute, legal representation, urgency, parties’ resources, reasons for resisting mediation, and potential sanctions for refusal. The Master of Rolls emphasised that any order should not undermine the core right to a judicial hearing and must be proportionate to the aim of settling the dispute fairly, swiftly, and at a reasonable cost.

Importantly, the Court of Appeal distinguished the prior statement by Dyson LJ in Halsey v. Milton Keynes General NHS Trust, asserting that compelling parties to use ADR no longer violates Article 6 of the ECHR.

The judge adhered to Dyson LJ’s stance, denying a stay in the case, which involved pursuing an internal complaints procedure by the Council. In future that would not be an issue. Therefore the Court of Appeal decision does open the door to mandatory or compulsory mediation, which is the general direction of travel advocated by the Civil Justice Council. What the Court must do is look at the circumstances of the particular case before deciding whether to order a stay. What the Court of Appeal would not do is decide whether an internal complaints process constitutes ADR, participation in which justifyies a stay.

This means that it is still open to defendants to argue that an internal complaints process should be followed before issuing proceedings and asking for a stay.

Practitioners are advised to monitor subsequent cases navigating the dynamics between non-court-based dispute resolution orders, sanctions for non-compliance, and Article 6 rights. In the interim, practitioners should proactively assess whether to seek, agree to, or oppose orders for mediation well before case management hearings, where courts are likely to explore non-court-based resolution options.

The decision will bring relief for housing disrepair litigators, as the Court of Appeal has not decided that Courts should always direct parties to follow an internal complaints process before starting proceedings. The court will not routinely stay cases for internal complaints processes. However, the Court might well stay a case for mediation to take place.

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