Mediate now or be told to do so; changes to the CPR

New changes to the CPR mean that courts in England and Wales can now order parties to engage in alternative dispute resolution (“ADR”) where such an order is proportionate and does not undermine the parties’ right to a judicial hearing.

Churchill v Merthyr Tydfil

The changes follows a government consultation on compulsory mediation in the county court and the decision  of the  Court of Appeal in James Churchill v Merthyr Tydfil County Borough Council  [2023] EWCA Civ 1416, handed down on 29 November 2023.

In this Churchill, the court  held that the courts do have the power to order parties to engage in mediation or another form of alternative dispute resolution (ADR), as well as having the power to stay proceedings to facilitate ADR between the parties. The Churchill case represents a significant change overturning the position understood to have been established by Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576; a case which essentially acted as a prohibition on the English Court’s powers to compel ADR. The Court of Appeal’s approach in Churchill was also consistent with the Civil Justice Council’s Report in June 2021 on ‘Compulsory ADR’

Following Churchill, the Civil Procedure Rule Committee commissioned a consultation on the amendment of the CPR, to give effect to the decision. The amendments were swiftly approved and came into force on  1 October 2024. The relevant statutory instrument is the Civil Procedure (Amendment No.3) Rules 2024 (SI 2024 No. 839). The amendments are set out in this document. 

The Amendments

The most significant change concerns the scope of CPR 1, where the overriding objective of civil justice is enshrined, and, from which the judiciary usually measure the exercise of their discretions. 

The objective of “enabling the court to deal with cases justly and at proportionate cost” is now expanded to include “(f) promoting or using alternative dispute resolution”. [Overriding Objective - CPR 1.1(f)]

CPR 1.4(2)(e), which deals with the court’s duty of active case management, now includes “ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution”.

The second set of amendments address a court’s management powers over the ordering of ADR as follows:

The Court’s Case Management Powers CPR 3.1(2)(o) (which form part of the Court’s case management powers) now includes:

“(o) order the parties to participate in ADR;

CPR 28, which deals with matters to be dealt with by directions in fast track and intermediate track cases, now includes “whether to order or encourage the parties to engage in alternative dispute resolution”.

CPR 29, case management in multitrack cases, requires directions hearing in every case and now provides:

“(1A) When giving directions, the court must consider whether to order or encourage the parties to participate in alternative dispute resolution.”

Finally and importantly, the changes  introduced also apply to   the costs provisions of CPR 44 and how the litigation has been conducted by the parties. Such conduct now includes:

“(e) whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution.”

Neither Churchill nor the amendments to the CPR are prescriptive on when and how the courts’ power to order ADR should be exercised. In Churchill, the Court of Appeal avoided setting limits on the courts’ discretion. Rather, the Court of Appeal noted a number of factors that could be relevant to the exercise of the discretion (for example, the sophistication of the parties, the cost of ADR and the prospect of it resolving the dispute), but it is for each court to consider the specific circumstances of the case when deciding whether an order for ADR is appropriate.

The fundamental change for general litigation will now lie in the fact that the Courts will be able to mobilise ADR (especially mediation) during the life of any case. This is in contrast with the pressure to mediate merely being generated by the likelihood that a case will reach trial, for example.

Lest it be assumed the court would move slowly, the indications suggest courts will flex these powers. In May 2024, in Northamber v Genee World [2024] EWCA Civ 428 the Court of Appeal determined appeals from a judgment awarding the claimant damages for breach of contract.  

“silence in the face of an invitation to participate in mediate is, as a general rule, of itself unreasonable even if a refusal might have been justified by the identification of reasonable grounds.”  The behaviour of two of the parties was, as such, “unreasonable. To compound matters, they breached an order of the court requiring them to explain their failure to agree to mediation. If breaches of such orders are ignored by courts when deciding costs, parties will have no incentive to comply with them. That would undermine the purpose of making them, which is robustly to encourage parties to mediate.”

Costs sanctions were applied and the court held that held that the appropriate penalty was to increase the claimant’s cost recovery by 5% to 75%. 

Whether or not the Courts will, in future, need to order mediation will depend upon whether the parties simply agree to use mediation by agreement, to avoid any risk of a costs sanction at case management hearings or upon a specific application.   Experience in other jurisdictions, suggests that compulsion usually means that parties pre-empt compulsion by consent. 

For the future litigation culture, the current spotlight is likely to be on how Courts now apply the amendments to CPR 1 to their caseloads.