Japanese Knotweed case becomes a flagship decision on whether Judges can compel parties to enter into non-court dispute resolution prior to bringing a civil claim

The recent Court of Appeal decision in Churchill v Merthyr Tydfil Council [2023] EWCA Civ 1416 on 29 November 2023 made headlines this month thanks to the Law Society, the Bar Council, the Civil Mediation Council, The Centre for Effective Dispute Resolution and The Chartered Institute of Arbitrators, amongst others being added to the proceedings as interested parties.

What started out life as a relatively simple claim regarding Japanese knotweed has turned into a flagship decision for all dispute resolution cases.

In the Churchill case, the Court of Appeal ordered that Judges can pause legal proceedings which are ongoing or order parties to take part in non -court-based dispute resolution processes.

The facts of the case were quite straightforward.   Mr Churchill made a claim against his Welsh local authority after discovering Japanese Knotweed in his garden. The Council owned adjoining land to the east of his property. Mr Churchill claimed that, since 2016, Japanese Knotweed had encroached from the council owned neighbouring land onto his property caused damage to it, a reduction in its value, and loss of enjoyment.

Mr Churchill instructed solicitors in 2020 who issued a letter of claim and the Council responded, querying why Mr Churchill had not made use of its internal complaints procedure and saying that if Mr Churchill issued proceedings without having done so, it would apply to the Court for a stay of proceedings to allow the complaints procedure to be utilised and it would also claim its costs.

Nevertheless, Mr Churchill went ahead and issued a claim without taking up the offer of referring his complaint to the Council’s internal complaints procedure.

During the course of the proceedings, Merthyr Tydfil Council argued that Mr Churchill should have explored non-court-based dispute resolution options such as its internal complaints process before taking legal action. The key questions decided by the Court of Appeal were was whether a claimant unreasonably refusing non-court based dispute resolution can be blocked from making a civil claim, whether a Judge could compel parties to take part in a form of non-court based dispute resolution before taking a civil claim to court and if so, whether forcing parties to go through alternate dispute resolution in this way, would breach their right to a fair trial under article 6 of the European Convention of Human Rights.

As part of its judgement, the Court of Appeal reconsidered the case of Halsey v Milton Keynes General NHS Trust [2004] which established that the parties could not be forced to enter into mediation to settle court-based disputes.

The Court of Appeal deemed the remarks regarding not compelling parties to participate in alternative dispute resolution made in Halsall obiter and no longer reflective of current law and instead confirmed that the court can lawfully stay court 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 essential right of the claim to proceed to a judicial hearing if settlement cannot be reached and providing that it is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.

This is a significant decision because the courts now, have clear guidance, that if the parties have failed to engage with alternative dispute resolution mechanisms and ways of resolving their dispute, and the court thinks it is appropriate for them to do so, they can stay proceedings and compel the parties to do so. This can include for example, requiring the parties to follow an internal complaints procedure before continuing with their claim or engaging in alternative methods of dispute resolution for example mediation.

It is going to be very important going forward that prior to bring a claim, businesses have carefully followed any internal complaints procedure are prepared to consider mediation, arbitration or other methods of non-court dispute resolution as a way to resolve claims in the first instance  Failure to do so could result in the court ordering that a claimant takes part in non-court based dispute resolution as appropriate. Failure to demonstrate a careful consideration of these issues could potentially lead to an adverse costs order against a claiming party.

If you'd like assistance in relation to the issues raised please do contact Liz Turner at lturner@ortolan.com