Courts do have the power to order parties to engage in ADR
Written By
Partner
UK
I am a partner in our International Dispute Resolution Group in London where I specialise primarily in resolving disputes arising out of franchise, licence, distribution and agency agreements.
In a landmark decision, the Court of Appeal has held that parties can be ordered to engage in ADR outside of the court process, effectively overturning the principles set out in the Halsey decision almost 20 years ago.
The dispute
The case concerned a property owned by Mr Churchill where Merthyr Tydfil Council Borough Council (“the Council”) owned land adjacent to the property. Mr Churchill claimed that the Council's land had Japanese knotweed which was encroaching on his property and causing damage. Mr Churchill elected not to use the Council’s Corporate Complaints Procedure (“the Procedure”) and instead sent a letter of claim to the Council. The Council asked why he had not made use of the Procedure and stated that it would apply for a stay should he litigate without doing so. Mr Churchill proceeded with his court claim. In response, the Council then applied to the court for a stay of the proceedings on the basis that Mr Churchill had not engaged in alternative dispute resolution (“ADR”) in the form of the Procedure.
The initial decision – Halsey principle
At first instance the judge dismissed the application for a stay, on the basis that he felt that he was bound by a principle established in the case of Halsey -v- Milton Keynes General (“the Halsey Principle”). The Halsey Principle states 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”. Although the judge felt he was bound by the Halsey Principle and so was not able to order a stay, he found that Mr Churchill had acted unreasonably in failing to comply with the Procedure. As a result, he granted the Council permission to appeal, believing that this case gave rise to an important point of principle.
Crucially, the Council’s appeal did not consider whether it was unreasonable for Mr Churchill to refuse to comply with the Procedure. The appeal was brought on the basis that: (1) the judge was initially wrong to believe that he was bound by the Halsey Principle, and (2) the CPR and overriding objective states that litigation should be a last resort, therefore the court should have the power to stay this claim as Mr Churchill had refused to comply with the Procedure.
The four issues that were dealt with in the appeal can be summarised as follows:
- Whether the judge at first instance was correct in believing that he was bound by the Halsey Principle.
- Whether the court can lawfully stay proceedings or order parties to engage in ADR.
- If the court can, how should the court decide whether to exercise these powers.
- Whether, on the facts of this dispute, the judge at first instance should have granted the Council’s application for a stay of proceedings.
