Churchill v Merthyr Tydfil County Borough Council (2023) EWCA Civ 1416

For transparency purposes, I acted for the Housing Law Practitioners Association on its intervention in this appeal.

There was a great weight of expectations on this appeal, with commentators (and participants) variously declaring it could mean compulsory pre-action ADR on all civil matters, or that claims against local authorities (and social landlords) would have to go through the LA/landlord’s in-house complaints procedure (hereafter IHCP) before even commencing pre-action protocol steps, or that all civil claims would be forced to mediate. Perhaps not surprisingly, then, it became something of a bun fight, with fresh waves of intervenors appearing over the horizon each day. (‘Intervenors, My Lady, thousands of them!’) In defence of the HLPA intervention, that was the very first application. But the final total was seven (albeit with three of them as one joint) – to wit:

(1) THE LAW SOCIETY
(2) THE BAR COUNCIL
(3) THE CIVIL MEDIATION COUNCIL
(4) THE CENTRE FOR EFFECTIVE DISPUTE RESOLUTION
(5) THE CHARTERED INSTITUTE OF ARBITRATORS
(6) HOUSING LAW PRACTITIONERS’ ASSOCIATION
(7) THE SOCIAL HOUSING LAW ASSOCIATION

In the end, the appeal judgment did one big thing, but not anything else. In fact it resolutely didn’t do some other things – to which I’ll return below.

As a reminder, this was a private law nuisance claim by Mr Churchill against Merthyr Tydfil CBC for encroachment onto Mr C’s land of Japanese knotweed from the council’s land. Merthyr had applied to stay the claim for the matter to be dealt with through the council’s IHCP. The first instance DDJ had said an opposed stay could not be given because of Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 WLR 3002 finding that imposing mediation on unwilling parties was an unacceptable obstruction on their right of access to the courts. However, the DDJ did find that Mr C had acted unreasonably in not engaging with the IHCP in breach of the spirit of the (general) pre-action protocol.

You might, at this point, think this slightly odd, as Mr C was not complaining about council services. It was a straightforward private nuisance claim against the council as landowner, not service provider or public body. If your neighbour at 32 Acacia Crescent is causing a common law nuisance, you don’t usually expect to be referred to their in-house complaints process. We’ll come back to this later on.

Merthyr’s appeal of the refusal of a stay was leapfrogged to the Court of Appeal. Merthyr effectively sought findings that:

i) the Judge below was wrong that Halsey as authority for refusing a stay

ii) the Judge below should have stayed proceedings, and

iii) that stay should have been on the basis that Mr C go through the council’s IHCP.

The Court of Appeal in Lord Vos, Master of the Rolls, lead judgment (and it has to be said the Master of the Rolls has not been backward in his championing of ‘non-court based dispute resolution’) took this opportunity to put aside Halsey.

The relevant passages of Halsey were obiter, not forming part of the main reasoning for the judgment in that case. It followed that the Judge below was not bound by it.

Subsequent ECtHR and CJEU case law, had made clear that a stay for ‘non court based dispute resolution’ was not necessarily an interference with Article 6 rights, so long as “it pursued a legitimate aim and whether there was a reasonable relationship of proportionality between the means employed and the aim sought to be achieved” or cause actual prejudice to the claimant’s case.

R (UNISON) v. Lord Chancellor [2017] UKSC 51 did not say anything to the contrary, so long as access to the courts was not blocked or unreasonably delayed.

So, it was open to a court to stay for ‘non court based dispute resolution’ even where the parties or a party was unwilling, so long as

the order made: (a) does not impair the very essence of the claimant’s right to a fair trial, (b) is made in pursuit of a legitimate aim, and (c) is proportionate to achieving that legitimate aim.

On factors for the court to consider, the Court of Appeal cited with approval the Bar Council’s list:

(i) the form of ADR being considered, (ii) whether the parties were legally advised or represented, (iii) whether ADR was likely to be effective or appropriate without such advice or representation, (iv) whether it was made clear to the parties that, if they did not settle, they were free to pursue their claim or defence, (v) the urgency of the case and the reasonableness of the delay caused by ADR, (vi) whether that delay would vitiate the claim or give rise to or exacerbate any limitation issue, (vii) the costs of ADR, both in absolute terms, and relative to the parties’ resources and the value of the claim, (viii) whether there was any realistic prospect of the claim being resolved through ADR, (ix) whether there was a significant imbalance in the parties’ levels of resource, bargaining power, or sophistication, (x) the reasons given by a party for not wishing to mediate: for example, if there had already been a recent unsuccessful attempt at ADR, and (xi) the reasonableness and proportionality of the sanction, in the event that a party declined ADR in the face of an order of the Court.

On what would amount to a suitable form of ‘non court based dispute resolution’, the Court of Appeal refused to be drawn.

The court can stay proceedings for negotiation between the parties, mediation, early neutral evaluation or any other process that has a prospect of allowing the parties to resolve their dispute. The merits and demerits of the process suggested will need to be considered by the court in each case.

The question of whether a council’s IHCP could be ADR was academic. It would depend on the facts of the case and on the scheme. However, the Court of Appeal noted that objections raised by Mr Churchill on his case would ‘no doubt be relevant’ to a decision by a judge. Those were:

(a) there was no neutral third party involved and the claim was dealt with by the manager of the Council’s own knotweed department, (b) no legal advice was available to the claimant, (c) there was no settled written procedure by which it operated, (d) it had no statutory backing, (e) it was a process that had no fixed timescale and might take an open ended amount of time, (f) the limitation period was not suspended during the process, (g) there was no provision for the payment of a claimant’s costs, and (h) there was no express provision allowing for the payment of compensation in addition to eradicating the knotweed.

In addition, the Bar Council factors mentioned above should be considered.

But on Merthyr Tydfil’s specific ground of appeal that the Judge should have stayed the claim and made Mr Churchill go through the council’s IHCP, the Court of Appeal demurred.

The difficulty here was that Mr Churchill had not cross-appealed the Judge below’s findings that he had acted unreasonably in not engaging with the IHCP (why he did not is a bit of puzzle for me). His criticisms of the IHCP in the appeal could not lead to the Court of Appeal reversing the finding of unreasonableness.

However, on the issues raised

First, it is plain that, had the judge not concluded that he was bound by Halsey to refuse a stay, he would have granted one; as I have said, the basis on which he would have done so is not appealed. Secondly, in fact, things have now moved on considerably. Mr Churchill has refused to allow the Council to treat the knotweed in his garden, standing on his right to seek compensation and costs from the court. Thirdly, whilst the stay was sought after the issue of legal proceedings, the Council’s internal complaints procedure is plainly intended to operate before proceedings have been issued. We are told that it is in a form that is in widespread use by Councils. Fourthly, the procedure itself seems, predominantly at least, to envisage a complaint about the Council’s services to council tax payers as opposed to private law claims against the Council as a neighbour. Finally, whilst the Council submits that its internal complaints procedure is crucial, because the total value of all knotweed claims brought by adjoining owners against the Council is very high indeed, it may not be the most appropriate process for an entrenched dispute of this kind.

So, in short, even if the IHCP had been appropriate at the time, which it probably wasn’t as a) aimed at pre-action, not post issue, b) not aimed at private law claims, and c) not suitable for large scale or entrenched issues, the Court of Appeal was certainly not going to order a stay for the IHCP now.

The claim was remitted to the county court.

Appeal allowed in part. On costs and next steps:

I would also indicate that it is my provisional view that: (i) there should be no order as to costs of this appeal as between the parties to the proceedings, and (ii) the parties ought to consider whether they can agree to a temporary stay for mediation or some other form of non-court-based adjudication.

Comment

There is a bit to unpick here, but the first observation has to be that this was surely an expensive way for Merthyr Tydfil to give the Master of the Rolls the opportunity to dispose of Halsey, whilst achieving nothing of what it actually wanted. On this specific case (and the many similar ones Merthyr said they faced), they were effectively told that their IHCP was not suitable as dispute resolution at a post-issue stage and were sent away to mediate or something of the sort, with a yet further indication that their IHCP was not suitable for private law matters, as opposed to service complaints.

And then, despite the partial success of the appeal, a view that no order as to costs was appropriate. That has got to hurt, as to the way the appeal was brought.

I’m leaving the general  access to justice point for now. This is clearly going to be argued in a lot of specific cases across the civil justice range, and no doubt a lot of appeals.

But on the decision overall, from a housing law perspective:

First, this is exclusively about the powers of the court to stay post-issue. It says nothing about pre-action stages. (Though obviously a wholly unreasonable refusal to enter ‘non court based dispute resolution’ at that stage may invite the court imposing a stay for such purposes at a post issue point.)

Second, the Court of Appeal refused to define what suitable ‘dispute resolution’ might be, but left it to argument in each case, based upon the case and upon the mechanism involved.

But note for instance, how that means here a strong indication that an IHCP – unless properly configured to do so – was not suitable for resolving private law or ‘entrenched’ large scale claims. (Again, no order as to costs indicated – Ouch).

In order to function as a form of ‘non court dispute resolution’ procedure, an IHCP would really need to address the Bar Council factors. I can’t say, anecdotally, that I can think of any council or social landlord IHCP that does so. And of course there is a fundamental disjuncture between a complaint scheme primarily intended to address service failures and the resolution of a dispute about the breach of a party’s legal obligations and the remedy in terms of actions and damages.

This, I strongly suspect, will become an increasingly hot issue in the post Social Housing Regulation Act world and with the increased powers of the regulator and the Social Housing Ombudsman.

While on the Ombudsman, we should note that the Ombudsman has directed that social landlords should treat a letter of claim as a complaint under their complaints scheme as well as engaging with the pre-action protocol.  If landlords follow this, as they should, then the IHCP has indeed been engaged at pre-action stage. But the landlords should not make the mistake of assuming a complaint response is the same as resolution of the prospective claim.

But as this excursion suggests, I think there will now be a period of applications for stays, or stupidly rigid pre-action stances, and appeals of the same, in housing conditions cases until matters settle down again. For that reason, I am keeping my powder dry on a number of additional arguments.

This all said, I am increasingly a fan of mediation. It has been successful (probably for both parties) in a number of large scale, multi-claimant cases I have been involved in as a way of resolving the cases at a relatively early stage. I routinely propose mediation as ADR in every pre-action protocol letter of claim, though it has never been taken up by the other side (except in the large scale, multi-claimant cases). I do think ADR, or ‘non court based dispute resolution’ is to be seriously considered.

But any council or social landlord thinking that the door is now open to insisting upon their IHCP as the only form of pre-action ADR, or trying to stay an issued claim to go though the IHCP is, I’m afraid, likely to be mistaken.