Summary of outcome

The Court of Appeal has confirmed a court can lawfully order a Stay in proceedings and compel the parties to engage in a “non-court-based dispute resolution process” [NCB dispute resolution].

Subject to there being no impact on “…the Claimant’s right to proceed to a judicial hearing, and [it being] proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost”.

They acknowledge that: “mediation, early neutral evaluation and other means of non-court-based dispute resolution are, in general terms, cheaper and quicker than the court-based solutions” and re-iterate that litigation should be a last resort.

Facts

Mr Churchill brought a claim against the council for damage to his property caused by Japanese knotweed from a neighbouring property they owned. He was invited to engage in the council’s complaints procedure but refused and issued court proceedings. The council sought an order staying proceedings and compelling Mr Churchill to engage in the out of court process.

That request was dismissed at first instance, the Judge considering himself bound by the comments of Dyson LJ in Halsey v Milton Keynes General Hospital NHS Trust [2004] EWCA Civ 576 that it seemed “likely that compulsion of ADR would be regarded as unacceptable constraint on the right of access to the court and therefore a violation of article 6 [of the Human Rights Act - the right to a fair trial].”

The Court of Appeal disagreed. First, because the comments were obiter (i.e. not the reasons for the decision in that case) and therefore not binding. Secondly, because the overwhelming case law, both foreign and domestic, highlighted that it was compatible with article 6 as long as a party’s access to a judicial hearing was not lost and the delay and process was proportionate to achieving resolution fairly, quickly and at reasonable cost.

When should the discretion be applied?

The Court of Appeal declined to lay down any fixed principles as to when the discretion should be applied, matters needing to be considered on a case-by-case basis, but did indicate that relevant factors could include:

• whether the proposed form of NCB dispute resolution is appropriate
• whether the process allows for legal representation and recovery of the associated costs to avoid a significant imbalance of power
• whether NCB dispute resolution will be effective and is able to offer a suitable form of resolution
• whether it is made clear that if resolution fails it is open to parties to pursue matters through the Court
• the urgency of the case and whether the delay will give rise to limitation issues
• whether there are realistic prospects of the claim being resolved, for example when dispute resolution has previously failed.

What is an appropriate form of non-court-based dispute resolution?

There is a wide range of options as highlighted in the Pre-Action Protocol which includes:

• mediation, a third party facilitating a resolution
• arbitration, a third party deciding the dispute
• early neutral evaluation, a third party giving an informed opinion on the dispute
• Ombudsmen schemes.

The Court of Appeal did not assess the suitability of the council’s complaints procedure but this case highlights that pro-active local schemes may also be appropriate but subject to consideration of the points above.

What happens if a party refuses to engage in non-court-based dispute resolution?

It is already well established within the Civil Procedure Rules that refusal to engage in dispute resolution may have costs consequences.

What does this mean in practical terms?

This Judgment highlights again the importance of engaging in dispute resolution at all stages.

Compulsory mediation is already required in non-injury small claims track claims (i.e. claims valued under £10,000) with the Small Claims Mediation Service offering a one hour free telephone mediation and court appointed mediator. It is envisaged that this will be expanded to also include personal injury and housing condition claims allocated to the Small Claims Track.

This additional clarity is therefore likely to see Judges in other areas more open to active case management including “encouraging the parties to use an alternative dispute resolution procedure if the court consider that appropriate” [CPR 1.4 (2) (e)] and in accordance with the overriding objective, to reduce costs and keep Claimants, Defendants and experts out of court.

It is therefore important to keep under consideration the approaches and options available to you (or your Members/Insureds) for dispute resolution in any given matter. It would be prudent to review any processes you currently have in place to ensure their suitability and accessibility, as well as how best to address any failures by others to engage in them when offered.

How Capsticks can help

Capsticks are experienced in all forms of dispute resolution offering mediation services, training on how to prepare for mediation and what to expect on the day as well as guidance on early neutral evaluations and other complaints / assessment processes.

If you want help assessing how best to manage your approach to dispute resolution contact Charlotte North, Jennifer Harris or Peter Marquand to see how we can help.