Following on from my earlier post detailing the decision in Churchill v Merthyr Tydfil County Borough Council where the Court of Appeal has held that the court does have the power to compel parties to engage in ADR, I thought it might be useful to discuss this from the perspective of the property sector.

The Court of Appeal in Churchill was very reluctant to be overly prescriptive about when and how the power to compel parties to use ADR should apply. Given that the ADR forum that was the subject of this dispute was the Council’s own internal complaints procedure, it seems that the Court of Appeal is leaning heavily towards enabling the use of ADR. They did not say this, but it was recognised that if the junior court had not felt unable to force a referral to ADR, then they would probably have done so. So, the CoA seems relaxed about the means of ADR being used, despite the slight criticisms they levelled at the council’s scheme.

The property space already has several ADR obligations. Estate and letting agents must be members of redress schemes, as do property managers. There are two redress schemes operating in this arena: The Property Ombudsman and the Property Redress Scheme. The Renters (Reform) Bill, a very topical issue, will also require all private landlords who rent out property in England to join a government approved redress scheme, regardless of whether they use an agent. This will massively increase the numbers of people joining redress schemes. While the government has made noises about streamlining redress and only having one scheme it seems unlikely in the short term given the massive amount of work that would be needed and the fact that the existing schemes are all contracted.  

However, all these schemes are compulsory, with considerable financial and criminal penalties for failure to sign up. That being the case it seems likely that agents and landlords can, and probably will, insist that cases against them are put into the ADR scheme first. That approach is entirely consistent with the decision in Churchill. No doubt different courts will take different views in different cases but as an initial position agents (now) and landlords (once the RRB is in effect) would be best advised to refer any claim against them to the relevant ADR scheme and insist that it is dealt with in this way.

Again, it seems as though the decision in Churchill is in line with the general push towards ADR in property and landlords and agents are both likely to press for these schemes to be used as a first resort.