Looking beyond Halsey and Churchill

Following the Court of Appeal decision in Churchill v Merthyr Tydfil County Borough Council [2023] (Churchill), the prominence of alternative dispute resolution (ADR) in English litigation is continuing to gather pace.  As of 1 October 2024, the Civil Procedure Rules (CPR) have been updated to incorporate ADR, bolstering the court's powers of case management and issuing costs sanctions.

Whilst the changes to the CPR demonstrate that ADR must become part and parcel of any dispute process, the practical implications that will follow, and how the Courts will adopt the new rules, remains to be seen.  In this article we discuss the case law background, the changes to the CPR and offer some practical guidance for parties considering ADR.

 

Halsey and Churchill: the background

In Churchill, the Court of Appeal was asked to consider whether:

• a court can lawfully order parties to engage in a non-court-based dispute resolution process; and
• if so, in what circumstances it should do so.

The case concerned a nuisance claim brought against the Council for encroachment of Japanese Knotweed. Following the issuing of proceedings by Mr Churchill, the Council applied to Court for a stay to allow the parties to follow the Council's internal corporate complaints procedure.

At first instance, the Deputy District Judge dismissed the Council's application, relying on Halsey v Milton Keynes General NHS Trust [2004] where Dyson LJ famously stated:

"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".

However, the Deputy District Judge granted permission to appeal on the basis that the case raised an important point of principle and practice.

On appeal, the principles of Halsey were considered in greater depth. In a departure from Dyson LJ's words, Sir Geoffrey Vos, Master of the Rolls, found that a power does exist to order ADR, so long as it does not impair a party’s rights to a fair trial under Article 6 of the European Convention on Human Rights. He concluded:

"as a matter of law, the court can lawfully stay existing proceedings for, or order, the parties to engage in a non-court based dispute resolution process" provided that "the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost."

The Court of Appeal's decision in Churchill marks a shift away from Halsey, which has long been regarded as a barrier to court ordered ADR. Nevertheless, Sir Geoffrey Vos's ruling is perhaps unsurprising, given his previous ruminations on the topic in 2021: "There is perhaps a linguistic problem: why do we keep on talking about Alternative Dispute Resolution? Dispute resolution should be an integrated whole…part and parcel of the process of resolving disputes wherever they arise in our society".¹

Most notably for practitioners, the Court of Appeal's decision also prompted the Civil Procedure Rules Committee to reconsider its own framework and adopt several new changes into the CPR.

 

ADR in the CPR: the key amendments to be aware of

First and foremost, the overriding objective of civil justice - namely, the objective of "enabling the court to deal with cases justly and at proportionate cost" - has been expanded to include "promoting or using alternative dispute resolution" (CPR 1.1(2)(f)).  The Court's case management duties have also been amended to include "ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution" (CPR 1.4(2)(e)).

Further changes to the Court's case management powers have been made to the CPR and are summarised in the table below:

CPR	Amendment
3.1(2)(o)	The Court's case management powers have been amended to include the power to "order the parties to participate in ADR".
28.7(1)(d); 28.14	When giving directions for the management of cases in the fast track and intermediate track, the Court may now "order or encourage the parties to engage in alternative dispute resolution".
29.2	When giving directions for the management of cases in the multitrack, the Court "must consider whether to order or encourage the parties to participate in alternative dispute resolution”.
PD 29.4.10(9)	When giving directions for the management of cases in the multitrack, the Court "may give directions ordering or encouraging the parties to engage in alternative dispute resolution (ADR). Such directions may be, for example, in the following terms: The parties shall by [date] consider whether the case is capable of resolution by ADR. If any party considers that the case is unsuitable for resolution by ADR, that party shall be prepared to justify that decision at the conclusion of the trial, should the judge consider that such means of resolution were appropriate, when he is considering the appropriate costs order to make. The party considering the case unsuitable for ADR shall, not less than 28 days before the commencement of the trial, file with the court a witness statement without prejudice save as to costs, giving reasons upon which they rely for saying that the case was unsuitable."
44.2(5)(e)	In deciding what order (if any) to make about costs, the Court must give regard to various factors such as the "conduct of the parties". This conduct now includes "whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution".

 

Going forward: the practical steps

The impact of these changes should not be underestimated. With ADR now built into the overriding objective, it is foreseeable that judges will find it easier to order parties to engage in ADR and/or make adverse costs orders against parties who unreasonably refuse to do so. It will certainly be interesting to see how future case law balances court-mandated dispute resolution and the threat of sanctions for non-compliance, with a party's Article 6 rights.

For now, we suggest parties navigate these choppy waters by adopting a measured approach to ADR, and consider taking the following practical steps:

1. Be familiar with the changes to the CPR – whilst most changes have been announced (as summarised above), it is foreseeable that further changes will be made as case law continues to evolve. It is also worth keeping an eye on Pre-Action Protocols and Court specific guides for future updates.
2. Assess whether ADR is appropriate – in Churchill, Sir Geoffrey Vos noted "It would be undesirable to provide a checklist or a score sheet for judges to operate". However, several factors were considered relevant to the discussion of whether ADR is appropriate for a claim, including: the form of ADR; whether the parties are represented; the urgency of the case; whether there is realistic prospect of the claim being resolved through ADR; and whether there is a significant imbalance in the parties' levels of resource and the costs involved. It is therefore likely that Courts will assess each case on a highly fact-sensitive basis.
3. Consider whether it is reasonable to refuse ADR – the potential costs consequences for parties who unreasonably refuse to mediate or respond to proposals for ADR are widely discussed in both Halsey and Churchill. Courts will now have regard to the parties' conduct towards ADR when assessing costs pursuant to CPR 44.2(5). While the changes to the CPR do not provide guidance on when it would be reasonable for a party to refuse to engage in ADR, some factors worth considering were discussed in Halsey, such as: whether the dispute is of a nature that is not appropriate for ADR for example, one relating to the construction of law; when one party's case is particularly strong; where the costs of ADR would be disproportionately high; and if engaging in ADR is unlikely to yield any results or would likely delay the trial.
4. Consider ADR early on – finally, conversations around ADR should be held from an early stage, so that it can be incorporated into the planning and overall strategy of litigation. Parties should also be prepared to continually consider ADR throughout the course of the dispute.

 

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¹ The Right Hon. Sir Geoffrey Vos, "The Relationship between Formal and Inform Justice", Hull University Friday 26 March 2021 Speech: The Relationship between Formal and Informal Justice