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Sat April 13 2024

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The push for mediation to resolve construction disputes

3 Apr Will enforced mediation end access to justice? Solicitor John Wallace reports

John Wallace is managing director of Ridgemont, a law firm specialising in construction and real estate
John Wallace is managing director of Ridgemont, a law firm specialising in construction and real estate

In James Churchill v Merthyr Tydfil County Borough Council and others [2023] EWCA Civ 1416 the claimant, James Churchill, occupied a property, impacted by the encroachment of Japanese knotweed  from adjacent land owned by Merthyr Tydfil CBC.  He sent a letter of claim to the council, which responded requiring him to follow the council’s corporate complaints procedure rather than issuing proceedings. 

James Churchill refused and filed proceedings in the County Court in July 2021.  Merthyr Tydfil County Borough Council applied for the proceedings to be stayed on 15th February 2022.  The judge at first instance, Deputy District Judge Kempton Rees, rejected the application, quoting Halsey v Milton Keynes General NHS Trust [2004] ECWA Civ 576 as “to oblige truly unwilling parties to refer their dispute to mediation would be to impose an unacceptable obstruction on their right to access to the court”. 

Merthyr Tydfil CBC appealed and Sir Geoffrey Vos, Master of the Rolls no less, delivered the leading judgment. 

The thought of court-enforced alternative dispute resolution (ADR) does not sit well for many lawyers who assert that parties are entitled to their day in court.  “Let the Judge decide”, they might say.  They may also argue that any settlement at mediation is always a compromise.  A claim with strong merits may succeed in its entirety at court and indemnity costs could be awarded – the claimant takes it all.  They would argue that the court ought not be imposing ADR on parties who do not want it, given the consensual nature of the process and the historic freedom of parties to pursue a claim if they so wish.

Before I reveal the outcome of the appeal, Sir Geoffrey Vos is a known proponent of ADR.  Reacting to a Civil Justice Council report on compulsory ADR in June 2021, he commented, “As I have said before, ADR should no longer be viewed as ‘alternative’ but as an integral part of the dispute resolution process; that process should focus on ‘resolution’ rather than ‘dispute’. This report opens the door to a significant shift towards earlier resolution”.

Back to the Court of Appeal, where Sir Geoffrey Vos opined: “Mediation, early neutral evaluation and other means of non-court-based dispute resolution are, in general terms, cheaper and quicker than court-based solutions. Whether the court should order or facilitate any particular method of non-court-based dispute resolution in a particular case is a matter of the court’s discretion, to which many factors will be relevant”. 

Sir Geoffrey Vos chose not to lay down any fixed principles as to what the court should consider when staying proceedings or ordering ADR. He said that such an order can only be made in circumstances where it “does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost”.

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I can tell you now which way this is going and it is a one-way ticket to mediation.  The courts are chronically under-funded and under-staffed.  The financial and time cost of litigation is huge.  In the construction sector there are insufficient specialist judges, particularly in the regions.  No wonder the courts are looking to ADR to lighten the burden.  And of course, mediation can work.  If the parties are not too polarised, if the lawyers are not too egotistical and there is a genuine will to get a deal done, mediation is a fast, relatively inexpensive way to resolve a dispute. When the parties wake-up in the morning, they can look at themselves in the bathroom mirror, breathe a sigh of relief and move-on.

A “deal” means that you give me something in return for me giving you something.  That means that both of us win something and lose something.  It is a compromise.  Well, what if your claim is so strong that if you get in front of a judge you are bound to win?  Is it right that the court should force you to sit in a mediation suite for nine hours, staring into the abyss, as your legal team jostle with their counterparts only for you to ultimately decide not to do the “deal” and press on with the proceedings.  And what if you are open to settling, to get this dispute over and done with, but your counter-party is not in the least interested?  Mediations are less expensive than litigation but lawyers and mediators do not come cheap, if even just for one day.

So it is going to be interesting to see the factors that the court takes into account when assessing whether to make such an order.  Despite Sir Geoffrey Vos’ unwillingness to lay down the principles that the court will need to consider, it seems clear that key factors will include the value of the claim, its context, its subject matter, pre-action conduct of the parties and a host of other factors.

There appears no real reason why the Technology & Construction Court (TCC) will not make such orders but questions will need to be asked about the skills and experience of any proposed mediator, to ensure that they have the requisite capacity to deal with the complex facts and law of construction law disputes.  Will we see TCC judges playing a non-judicative role? It seems unlikely. 

The impact on the construction sector is likely to be softened by the fact we have our own form of ADR in adjudication.  Like it or lump it, it shares many of mediation’s strengths and weaknesses, providing a quick decision rather than true justice.  Perhaps the emergence of mediation as the de rigueur form of ADR will see construction parties turn to mediation to resolve disputes as an alternative to adjudication. I, for one, would promote that idea.  It is an underused method of resolving disputes in the construction sector and provides greater control for parties than submitting themselves to the lottery of adjudication.

About the author: John Wallace is managing director of Ridgemont, a law firm specialising in construction and real estate

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