As of 1 October 2024, the courts in England and Wales have much increased powers to impose adverse cost sanctions on those who fail to attend alternative dispute resolution (“ADR”) in cases under the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”) and the Inheritance (Provisions for Family and Dependants) Act 1975 (“Inheritance Act”). The Court could also require parties to engage in mediation and apply a stay on proceedings until this is done.

Key Changes

These changes come about as a result of the decision in the case of Churchill v Merthyr Tydfil CBC [2023] (EWCA Civ 1416). This overturned the decision in Halsey v Milton Keynes General NHS TRUST [2004] EWCA Civ 576 which stated that requiring ADR would breach the right to a fair trial contained in Article 6 of the European Convention on Human Rights.

The most significant change as a result is the amendment to the scope of the Civil Procedure Rules (“CPR”) 1 ‘The Overriding Objective’ to include a new ground ‘f’ being to promote or use ADR when considering how to deal with cases ‘justly and proportionately’. When considering a cost order, the amendment requires the court to consider the conduct of the parties and now makes express reference to “whether a party failed to comply with an order for ADR, or unreasonably failed to engage in alternative dispute resolution” (CPR 44.2(5)).

The new rules encourage parties to consider mediation and other methods of ADR before going to court to resolve an issue. This is a significant ruling which established that the courts can lawfully order or stay proceedings to encourage parties to engage in ADR provided it is proportionate in the circumstances and does not infringe the claimant’s fundamental right to a judicial hearing.

The court in Churchill emphasized that a case-by-case approach will be adopted and will consider factors such as; the suitability and costs of ADR, whether the parties are represented, the urgency of the case and whether ADR could realistically resolve the dispute.

However, the general thrust of the change will mean that the courts are increasingly going to press parties to engage in ADR and will deal firmly with parties that refuse. JMW has had several recent cases where the other party failed to approach ADR in a positive manner and costs were paid on the basis of a higher calculation rate as a result. So it is important that parties and their legal advisors are acutely aware of these changes and what they will mean in practice.

Conclusion

The changes bring claims under TOLATA and the Inheritance Act into the scope of compulsory ADR to an extent and reinforce the of the growing emphasis on ADR as an essential part of dispute resolution.

Understanding these changes can help when navigating a dispute and approaching it in a more effective and efficient way.