The Civil Procedure Rule Committee (CPRC) is considering amendments to the Civil Procedure Rules (CPR) concerning the Court’s power to order litigants to engage in alternative dispute resolution (ADR).
The role of ADR and Churchill
The proposed amendments aim to reflect the recent Court of Appeal judgment in James Churchill v Merthyr Tydfil Borough Council [2023] EWCA Civ 1416. The decision in Churchill held that the english courts have the power to stay civil proceedings and compel the parties to engage in a “non-court-based dispute resolution process”.
The Court of Appeal declined to lay down fixed principles or a set of rules to govern when ADR is suitable and instead this should be considered on a case-by-case basis. There are however relevant factors to determine suitability, such as:
- the appropriateness of ADR in a given situation
- if the proposed method of ADR allows for legal representation and costs recovery (i.e. avoid a significant imbalance of power)
- whether the method of ADR will be effective and can provide a full resolution to the dispute (where ADR fails to reach resolution, it must still be possible for parties to pursue litigation through the courts)
- the urgency of the particular case and any potential limitation issues which could render ADR impracticable
- whether there are realistic prospects of success by examining previous attempts at ADR and the outcomes.
In Churchill it was stated 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”, here the Court further reiterated that litigation should be a last resort.
The key takeaway from Churchill is that a stay can be ordered by the Court providing that the order does not impair the very essence of the Claimant’s fundamental right to a judicial hearing and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost. The Churchill ruling overturned the previous prohibition on the english Court’s powers to compel ADR, as per Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 and removed the concern that mandatory mediation amounts to a denial of justice.
Proposed amendments
The proposed amendments discussed by the CPRC are detailed below.
- Changes to 1.1 would add that dealing with a case justly and at proportionate cost includes, so far as practicable, using and promoting ADR methods. Reference to ADR within the overriding objective would underline that considering the use of ADR should be a key part of the court process.
- Changes to 1.4 and 3.1 would clarify the position established in Churchill v Merthyr Tydfil that judges may order as well as encourage parties to participate in ADR procedure.
- Changes to Parts 28 and 29 would add that courts must consider whether to order or encourage parties to participate in ADR for fast-track, intermediate track and multitrack claims.
- Changes to Part 44 would add that failure to comply with an order for ADR or unreasonable failure to participate in ADR proposed by another party would come under the consideration of the conduct of parties when deciding to make any order about costs.
The consultation closed on 28 May 2024. If the proposed amendments are implemented as described above, it will mean that judges across England and Wales have legitimate powers and responsibilities to order parties to engage with ADR.
If a party refuses to engage in ADR, the proposed changes to Part 44 of the Civil Procedure Rules will apply alongside Paragraph 4.1 of the Pre-Action Protocol for Housing Conditions Claims, which states “the courts take the view that litigation should be a last resort, and that claims should not be issued while a settlement is still actively being explored. Parties should be aware that the court will take into account the extent of the parties’ compliance with this Protocol when making orders about who should pay costs.”
Part 44.3(5) of the Civil Procedure Rules regarding costs considers the “conduct [of the parties] before, as well as during, the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol”. Therefore, a party who unreasonably refuses to comply with ADR could potentially face costs sanctions.
The Birketts view
The Court’s powers to stay proceedings and seek ADR is particularly important to our social housing clients who are currently facing a surge in disrepair claims. ADR could prove to be an important tool in turning the tide of disrepair claims and mediation can be a cost-effective method of ADR which often leads to a quicker resolution than going to trial.
If providers can implement a robust complaints procedure this could form part of what is considered ADR and could potentially save the costs associated with attending court. A well calibrated and robust complaints procedure can serve as a valuable component of ADR. Complaints procedures which can provide a fair award of compensation, reflecting what the claimant would be entitled to in a formal court setting, have the potential to be a successful form of non-court-based resolutions.
How can Birketts help?
If you have any queries regarding the content of this article or wish to discuss any issue regarding the management of your tenants or stock, please contact Clive Adams, Jonathan Hulley or any member of the Social Housing Team.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at July 2024.