Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416

A dispute about Japanese knotweed encroaching from council land became the case that rewrote twenty years of settled understanding about when a court can force parties into mediation. Churchill did not just permit the court to order ADR. It dismantled the reasoning in Halsey that everyone had assumed prevented it, and triggered the most significant amendment to the Civil Procedure Rules in a generation.

The Facts

Mr James Churchill bought a property in Merthyr Tydfil in 2015. He discovered Japanese knotweed encroaching onto his garden from land owned by the adjoining local authority, Merthyr Tydfil County Borough Council. He wrote to the Council. The Council’s response pointed him to its internal corporate complaints procedure, a free process, and warned that if he issued court proceedings without using it first, the Council would apply for a stay and seek to recover its costs.

Mr Churchill did not engage with the complaints procedure. He issued a claim in nuisance in the County Court, seeking damages for the diminution in value of his property and the cost of treatment. The Council applied to stay the proceedings so that Mr Churchill could use the complaints procedure first.

Procedural History

• District Judge (County Court at Cardiff): refused the Council’s application for a stay, holding that Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 prevented the court from compelling an unwilling litigant into ADR, and that ordering a stay would therefore be unlawful.
• Court of Appeal [2023] EWCA Civ 1416: the Council did not appeal the refusal of the stay itself, but the Civil Justice Council and the Master of the Rolls took the opportunity, with the parties’ agreement and with permission for extensive third-party intervention, to resolve the underlying point of principle: does the court have the power to order ADR at all? The Court of Appeal held that it does, but declined to exercise it on the facts, given that the Council’s complaints procedure was not independently adjudicated and lacked some of the features of a genuine ADR process.

The Issues

1. Does the court have power, consistent with Article 6 ECHR, to stay proceedings or order an unwilling party to engage in a non-court based dispute resolution process?
2. Was the passage in Halsey stating that the court had no such power part of the ratio of that case, or obiter?
3. If the power exists, what factors should guide its exercise, and should it be exercised on the facts of Mr Churchill’s case?

The Ratio: The Power to Compel ADR

The Court of Appeal’s reasoning proceeded in two stages. First, it held that requiring engagement with an ADR process does not, of itself, breach Article 6, because it does not deny access to the court. It merely delays it, and only where the delay and the process imposed are proportionate. Second, having established that the power exists in principle, the Court considered whether it should be exercised in Mr Churchill’s case, and declined to order a stay: the Council’s internal complaints procedure was not run by an independent, neutral third party in the way a genuine mediation would be, and the Court was not satisfied it was an appropriate substitute for litigation on these facts.

Unknotting Halsey

The entire case turned on a single sentence from Lord Dyson’s judgment in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, understood for two decades to mean that a court could never order genuinely unwilling parties into mediation, because to do so would breach their right of access to the court under Article 6. That sentence had shaped costs practice, procedural strategy and professional advice across the civil justice system since 2004.

The Court of Appeal in Churchill held that this passage was obiter dicta: it was not a necessary part of the reasoning that led to the actual decision in Halsey, which was a costs decision about whether a party who refused an invitation to mediate should be penalised in costs. Being obiter, it did not bind the Court of Appeal in Churchill, and the Court declined to follow it, holding instead that compulsion is capable of being lawful where the process ordered is proportionate and does not foreclose the ultimate right to a trial.

The Relevant Factors

The Court of Appeal deliberately declined to lay down a fixed or exhaustive checklist for when a stay should be ordered, preferring to leave the exercise of the power flexible and fact-sensitive. It did, however, identify factors likely to be relevant:

• The form of ADR being considered, and whether it is proportionate to the process being displaced;
• Whether the parties are legally advised or represented, and whether ADR is likely to be effective without such advice;
• Whether it has been made sufficiently clear to the parties that, if the ADR process does not resolve the dispute, they remain free to pursue their claim or defence in the usual way;
• The urgency of the case and the reasonableness of any delay caused by the ADR process, including whether delay would prejudice a party or give rise to or exacerbate a limitation issue;
• The cost of the ADR process, in absolute terms and relative to the parties’ resources and the value of the claim.

The October 2024 CPR Amendments

The judgment’s practical significance was cemented by the Civil Procedure Rule Committee, which amended the Civil Procedure Rules with effect from 1 October 2024 to give the Churchill power an explicit rules-based foundation. The overriding objective at CPR 1.1 was amended to confirm that dealing with a case justly and at proportionate cost includes, so far as practicable, using and promoting ADR. CPR 1.4, governing the court’s case management duties, and CPR 3.1, governing its case management powers, were both amended to make clear that judges may order, not merely encourage, parties to engage in ADR, with the possibility of costs sanctions for a party who fails to comply with an ADR order or who does not engage with a process proposed by the other side.

Relevance to Tax Disputes

Churchill is not a tax case, but its consequences reach directly into tax litigation, because tribunal ADR and mediation sit on the same doctrinal foundation as civil mediation. HMRC's own Alternative Dispute Resolution guidance already encouraged, but did not compel, use of mediation in appropriate tax appeals. Churchill and the resulting CPR amendments strengthen the case for tribunals taking an equally strong approach: refusing to engage with a genuine, proportionate offer of ADR is now harder to justify, and more likely to attract adverse costs consequences where the complex costs regime applies, or to be held against a party at the case management stage.

Practitioner Application

Using Churchill offensively

• Propose ADR early and in writing. A clear, reasoned written proposal, referencing the Churchill factors, puts the other side on notice and creates a paper trail useful at any later costs argument.
• Address the factors directly. Explain why the proposed process is proportionate, why any delay will not prejudice the other party or engage limitation, and confirm expressly that the right to litigate is preserved if ADR fails.
• Do not assume compulsion is automatic. Churchill itself refused the stay on its facts. A process that is not independently run, or that looks like a substitute for adjudication rather than a genuine attempt at settlement, may not satisfy the court.

Common mistakes

• Refusing ADR outright on the old assumption, drawn from Halsey, that a court cannot compel it, that assumption no longer holds.
• Treating an internal, non-independent complaints process as equivalent to genuine third-party mediation; Churchill itself shows a court will scrutinise the substance of what is proposed.
• Ignoring the October 2024 CPR amendments when advising on litigation strategy commenced or continuing after that date.

Frequently Asked Questions