Litigation against local authorities - is there always an alternative? Churchill v Merthyr Tydfil Borough Council

There has been a continued push in recent times for parties to settle claims by way of Alternative Dispute Resolution (“ADR”) methods such as mediation rather than proceed to trial.

The Overriding Objective, which is set out in Part 1 of the Civil Procedure Rules, includes an obligation on the Court to actively manage cases, which includes encouraging parties to use a form of ADR if the Court considers that it is appropriate. 

The Ministry of Justice confirmed on 25 July 2023 that mediation would be made compulsory in all Small Claims Track matters. However, the Courts have stopped short of the introduction of compulsory ADR in any other specific types of case. The most recent Court of Appeal judgment which gave guidance on this point is Halsey v Milton Keynes General NHS Trust [2004] EWCA 576. 

In Halsey, the Court of Appeal concluded that although the Courts should continue to encourage the parties to use ADR where it was appropriate to do so, to make it compulsory would result in an “unacceptable obstruction to the right of access to the court”, in breach of Article 6 of the European Convention on Human Rights (“ECHR”). Article 6 of the ECHR provides that citizens are given a right to a “fair and public hearing within a reasonable time by an independent and impartial tribunal established by law”. It was the Court of Appeal’s conclusion that to make ADR compulsory would be a barrier to this.

Last week, the Court of Appeal heard the case of Churchill v Merthyr Tydfil County Borough Council. The case concerned Japanese Knotweed (“JKW”). In 2016, the Claimant, Mr Churchill, identified JKW growing in his garden and issued a claim against the Council for damages for the cost of its removal, for the diminution in value of his property as a result of the presence of the JKW, and for unlawful interference with his land. The Council denied liability and the matter proceeded to trial. The Council applied for a stay to allow time for the Claimant to exhaust the Council’s internal complaints process before the litigation could proceed further. The trial judge said that, based on the judgment in Halsey, he did not have the power to grant such a stay and the stay was refused. 

The Council believes that the Claimant was obliged to engage with its internal complaints process before bringing proceedings. This is the point which the Council has asked the Court of Appeal to address. If successful in its appeal, this could result in parties such civil claims against local authorities to be required to engage in an internal complaints process before issuing proceedings. 

This appeal relates to a claim for JKW, but this may result in other claims commonly brought against local authorities, such as those for housing disrepair, being similarly affected. A successful appeal by the Council would change the litigation landscape. The Social Housing Law Association (“SHLA”) and the Housing Law Practitioners Association (“HLPA”) have been given permission to intervene. HLPA’s interest is on the basis that the outcome would be relevant to housing cases.

The hearing has now taken place and the Court’s decision is awaited. 

In giving its decision, the Court of Appeal will need to consider whether a local authority’s internal complaints process is tantamount to “ADR”. The Council believes that the Claimant’s refusal to go via its own internal complaints process is a refusal to engage in “a form of ADR”. However, a council’s internal complaints process will naturally have a degree of bias towards the Council, however inadvertent and unintentional that might be, making it wholly unlike other forms of ADR such as mediation or referral to the Housing Ombudsman. 

It would also give rise to a curious situation in which a Claimant is obliged to participate in a process it did not “sign up to” in order to pursue a common law claim in nuisance or negligence (this is distinct from a contractual dispute where the parties may have agreed to use a particular forum to resolve disputes).

However, if Claimants are compelled to exhaust the internal complaints process before pursuing a claim, it may be enough to put off “claims farmers” who often look to housing disrepair claims in order to target potentially vulnerable customers in order to make a quick financial return.

If the Court of Appeal decides to give more power to the Courts to compel the parties to mediate before allowing claims against local authorities to proceed, this should also result in a lower spend on claims by local authorities and less use of taxpayers’ money. Most housing disrepair claims tend to be relatively low value, with the costs incurred by social landlords in dealing with these claims often disproportionate to their value. 

Potential disadvantages:

Whilst an increased use of ADR would ultimately be welcome for local authorities, a requirement for compulsory ADR would not be without its issues. 

Many claims for JKW and for housing disrepair are brought against registered providers of social housing, who are not “local authorities”. Registered providers of social housing are generally not-for-profit organisations, albeit not funded by taxpayers. The imposition of compulsory mediation on those bringing claims against local authorities but not for those bringing claims against not-for-profit organisations such as registered providers of social housing could create a two-tier system where claimant solicitors target registered providers as these claims are more likely to be profitable; this would in turn open up registered providers to an increased number of spurious claims which they would have to divert disproportionate resource to. For this reason, it is easy to imagine that the Court of Appeal will find it hard to make a decision which justifies its application to local authority defendants only. 

In times when many local authorities face financial challenges due to increasing operational costs and budget constraints, there is a chance that sending many complaints through such internal processes could cause significant delays. 

If the Court of Appeal finds that those making a claim against a local authority must engage in the internal complaints process, or ADR more widely, it could result in claimants simply “going through the motions”, proceeding with no intention of settlement and using the process as a means to an end. This would simply add another layer of costs and would negate the supposed costs benefit of ADR. 

It is arguable that a requirement to use ADR before proceeding with a claim, even via a Pre-action Protocol if one is relevant, is a matter for legislation rather than one for the Courts to decide. There is also a risk that, even if the Council is successful, any judgment given by the Court of Appeal could be subject to an appeal to the Supreme Court in the future.

We expect judgment to be given in a few months’ time.