It is now nearly a year since the Court of Appeal determined in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 that non-willing parties to litigation could be compelled to non-court based alternative dispute resolution (“ADR”). This article explores the rippling effect of the decision both in changes to the Civil Procedure Rules, and looks developing caselaw.
On 1 October 2024 the Civil Procedure (Amendment No.3) Rules 2024 SI 2024/839 came into force. Amongst other things the October update makes significant changes to promote ADR including an amendment to Rule 1 the Overriding Objective and in other parts to promote the use of alternative dispute resolution.
The amendments are pervasive, affecting the full spectrum of litigation from the Overriding Objective to active consideration of ADR as part of standard directions. Compliance is likely to be driven by the threat of cost consequences, which are also clarified.
The Overriding Objective
The overriding objective is set out in Rule 1. The amendments appear in rr.1.1 and 1.4.
1.1(2) Dealing with cases justly and at proportionate cost includes, so far as is practicable-
… (f) promoting or using alternative dispute resolution
The court’s duty to manage cases now includes at r.1.4(e) ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution. This is complimented by (f) helping the parties to settle the whole or part of the case.
These objectives are practically facilitated through case management directions, which are dealt with depending on allocation.
The Small Claims Track
In claims allocated to the Small Claims Track, the position in relation to mediation depends on whether the claim was issued before or after 22 May 2024.
Pre-22 May 2024, the court has power to stay proceedings to enable the parties to engage in settlement discussions: r.26.4(1).
Post-22 May 2024, the new PD 51ZE makes important changes. It includes a pilot scheme lasting to 21 May 2026 and which changes rules 26.6, 27.8, 27.14, PD27 App.B and r.45.13 (fixed costs). The impact is that mediation will be compulsory for all cases allocated to the small claims track where they are money claims only, not issued as Online Civil Money Claims, and which are not road traffic or personal injury claims. In respect of those claims, PD51R applies.
Where mediation applies but the case fails to settle, the court is required to consider whether to impose a sanction because of a refusal to mediate when conducting the hearing itself (changes to r.27.8) and on costs (changes to r.45.13). The court has power to reduce or inflate fixed costs by up to 50% (changes to r.45.13).
The standard directions for small claims are modified to require the parties to explain why the failed to attend a mediation when submitting their documents (PD 27A App.B).
Fast Track and Intermediate Track & Multi Track
The standard directions to be made by court in Fast Track and Intermediate Tracks must now include a provision after those directions relating to disclosure, evidence and experts “whether to order or encourage the parties to engage in alternative dispute resolution”:
r.28.7(d), r.28.14(f) and 29.2(1A).
Model Orders
For Fast Track and Intermediate Track claims, model paragraphs for inclusion in orders are available here:
https://www.justice.gov.uk/courts/procedure-rules/civil/standard-directions/list-of-cases-of-common-occurrence/menu-of-sd-paragraphs
The new model paragraphs for a stay to facilitate ADR is;
(1) The claim is stayed until xxxx, during which period the parties will attempt to settle the matter or to narrow the issues.
(2) By 4pm on xxxx the Claimant must notify the court in writing of the outcome of negotiations (without disclosing any matters which remain subject to ‘without prejudice’ terms) and what, if any, further directions are sought. Failure to comply with this direction or to engage properly in negotiations may result in the application of sanctions. If settlement has been reached, the parties must file a consent order signed by all of them.
For Multi-Track claims there is specific wording set out in PD29, paragraph 4.10 which says;
4.10 Where the court is to give directions on its own initiative without holding a case management conference and it is not aware of any steps taken by the parties other than the exchange of statements of case, its general approach will be-
…
(9) in such cases as the court thinks appropriate, 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 hall 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.”
Costs consequences
The general discretion of the court in awarding costs is set out in r.44.2, of which one element in r.44.2(5) includes the conduct of the parties. The conduct includes matters such as;
(a) Conduct before, as well as during, the proceedings and in particular Pre-Action Conduct or any relevant pre-action protocol
…
(e) whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution.
Conclusion
The first compulsory mediation orders are already being seen in the courts. The changes to the CPR will provide confidence to the courts to make those orders, and perhaps to bring a truly unwilling party to come to the negotiating table.