The Court of Appeal has held that the courts have powers to make parties subject to a form of alternative dispute resolution (ADR) without their consent.

Background

ADR essentially refers to all methods of resolving disputes other than by court proceedings. The case of Lomax v Lomax concerned Early Neutral Evaluation (ENE), a process in which an independent third party evaluator assesses the merits of each party’s position before providing a view on the strength of those positions and the likely outcome of the case.

The view provided by the evaluator is not binding on the parties and the process is usually without prejudice so that it cannot be referred to in any later or ongoing court proceedings. Its purpose is to encourage negotiation between the parties to lead to a settlement rather than court proceedings.

Facts

The case concerned proceedings issued by a widow against the executors of her late husband’s will. The question the court had to decide was whether it could only order an ENE if all the parties agreed, or whether the court could impose an ENE.

Under rule 3.1(2)(m) of the Civil Procedure Rules (CPR) which govern civil court proceedings, the court has general powers of case management. From 1 October 2015 these have included the power to "take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an ENE with the aim of helping the parties settle the case." Rule 3.3(1) states “Except where a rule or some other enactment provide otherwise, the court may exercise its powers on an application or of its own initiative”.

The widow wanted to have an ENE but the executors did not. The executors argued that, because they did not consent to an ENE, the court could not compel the parties to have one. They relied in particular on the case of Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002 in which Lord Dyson said: “It seems to us 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”. They also relied on various court guides, such as the Chancery Guide and Commercial Court Guide which give more detail as to procedural practice in specific courts in saying that Halsey applied to all forms of ADR and said forcing parties to have an ENE restricted access to the court.

Decision

The Court of Appeal found for the widow. It held:

  • The wording of CPR 3.1(2)(m) did not contain an express requirement for the parties to consent before an ENE hearing was ordered. It would have been very easy to include such a provision, and its absence was a powerful indication that consent is not required
  • Halsey had dealt with a very different situation, being whether the court could oblige parties to submit their disputes to mediation, whereas this case concerned ENE as part of (not separate to) the court process. Moreover, the courts’ engagement with mediation has moved on significantly since Halsey was decided
  • ENE does not materially obstruct a party’s access to court but is a step in the process which can assist to resolve cases fairly and sensibly. The analogous evidence of Financial Dispute Resolution (FDR) hearings in the Family Court showed that they often help resolve disputes and can result in a costs saving
  • Court guides can assist where there is ambiguity but they cannot overrule court rules and directions

Accordingly, the court did have the power to order an ENE hearing without the consent of the parties. To limit this power would not be in accordance with the overriding objective set out in the CPR, in particular the need to save expense and allocate an appropriate share of the court’s resources to cases.

The question of whether or not to compel parties to take part in ADR during or prior to court proceedings is one which has been debated for many years now. Whilst England and Wales is still some way off compulsory ADR, the change in the CPR from 1 October 2015 to include the power to have an ENE and this subsequent decision arguably lay the foundation for it.

With ever increasing court fees coupled with a reduction in court resources leading to greater delays in hearings being listed, ADR is an increasingly attractive option in any event.

Lomax v Lomax [2019] EWCA Civ 1467