Background
In James Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, Mr Churchill having bought a house in 2015, complained to the Council that Japanese Knotweed had encroached his garden from the adjoining Council owned land and this in turn had caused both a loss of value and enjoyment.
When Mr Churchill duly complained to the Council in 2020, the Council in turn questioned why he hadn’t used the Council’s own corporate complaints procedure to deal with his complaint. Mr Churchill was notified by the Council that if he initiated legal proceedings, they [the Council] would seek to stay the proceedings on the basis that Mr Churchill hadn’t followed their procedure. Mr Churchill issued proceedings in the Court and the Council applied for a stay of proceedings.
Deputy District Judge Kempton Rees dismissed the stay application on 12 May 2022, having delivered a reserved judgement. The DDJ held that he was bound to follow Dyson LJ’s statement in Halsey v. Milton Keynes General NHS Trust :
‘to the effect 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’ and accordingly refused the Council’s request of a stay of proceedings. The DDJ also found that Mr Churchill and his lawyers had acted unreasonably by failing to engage with the Council’s complaints procedure – the conduct in question was found to be contrary to the spirit and the letter of the relevant pre-action protocol ’.
On 4 August 2022, HH Judge Harrison granted the Council permission to appeal and given the important point of principle in question, was duly referred to the Court of Appeal.
Court of Appeal’s decision
The Court of Appeal (Baroness Carr, Lady Chief Justice, Sir Geoffrey Vos, Master of the Rolls (delivered the judgement), and Lord Justice Birss) allowed the appeal in part and decided [for our purposes] that:
- The passages from Dyson LJ’s judgment in Halsey, relied upon by the judge, were not part of the essential reasoning in that case and therefore the judge was not bound to dismiss the Council’s application for a stay.
- The court could lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that:
- a. the order made did not impair the very essence of the claimant’s right to proceed to a judicial hearing; and
- was proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at a reasonable cost
3. the court would not lay down fixed principles as to what would be relevant to determining whether proceedings should be stayed or whether to order the parties to engage in a non-court-based dispute resolution process.
4. in the circumstances of this case, a stay of the proceedings would not now be granted, but the parties ought to consider whether they could agree to a temporary stay for mediation or some other form of non-court-based adjudication.
Judgement given … what now?
The Middle East as with all other regions, including countries as the UK, attract numerous international businesses and professionals, who are aware of a region or country’s proactive efforts to apply international best practice.
Governance and corporate compliance are clearly two key operational priority areas for organisations when investing. Investors (both regional and international) want and arguably demand to see transparent and consistent decision making by governmental organisations; knowing that they will be treated equally and fairly is an increasing necessity when deciding which country or free trade area to invest in.
Some believe that if the governmental organisation in question had adopted an appropriate and sufficiently independent complaints process then this matter might never have gone to court. It’s important therefore that all organisations who deal with investors or other stakeholders review their procedures so as to ensure that they are both appropriate and are capable of withstanding scrutiny, by the courts and equally as importantly others such as investors . If the system or procedure in question can give the user the necessary confidence then this will reduce the risk of further action; regardless of the decision!
Unfortunately, no system or procedure is perfect and even if we think they are, someone will always want to challenge the decision! Clearly certain matters will obviously need to be dealt with in the courtroom, but there is a large cohort of disputes that can equally, be resolved fairly, quickly and at a reasonable cost using alternate means.
Indeed, proceeding to trial and not considering or declining to use alternate forms of dispute resolution, may result in an adverse cost finding regardless of who ‘wins the point’.
In terms of the ADR toolkit, there are many forms of tried, tested and appropriate mechanisms, depending on the circumstances of the case which can be used. It is also encouraging to note that the Court of Appeal in this particular case did not seek in any way to limit the parties’ freedom of choice, nor did they curtail the judges’ discretion by way of a checklist or scoresheet. There was a clear recognition that the parties owned the procedure and should be allowed to use whatever methodology suited them to resolve the issue.
The ADR toolkit of course includes both the traditional forms such as mediation, adjudication, neutral evaluation, arbitration but also allows parties to use novel or more situation specific approaches such as Arb-med – a format which has gained increasing in popularity. Used properly, there are advantages to both the professional client and the adviser; and equally importantly a platform to attract an increasing number of international clients who will gain an increasing confidence in the way within which organisations take decisions and resolve matters.
Looking ahead
In terms of corporate governance and compliance generally, organisations, business and individuals need to ensure that they have an appropriate system in place to deal with complaints and other corporate or organisational requirements; especially when dealing with members of the public and other third parties. Applying the correct approach enhances organisational reputation and attractiveness, whilst also removing unnecessary risks or negative criticism.
Organisations and individuals alike should stop and actively consider whether or not their dispute / grievance for example, can or should, be dealt with in an alternative way; other than initiating court proceedings – especially when this means settling the dispute fairly, quickly and at a reasonable cost.
Get in touch
Huw Davies has extensive experience advising organizations on corporate governance and resolving disputes. If you have any questions about this article or need support with governance and resolving disputes feel free to contact Huw at HDavies@1ec.co.uk
