Last year we were involved in opposing an application in a contentious trust matter for the parties to be forced to mediate their dispute.  The dispute related to two trusts connected to the estate of the parties’ father who had died 27 years before.  The beneficiaries of the trusts were unable to agree how to deal with the trust property, some of which formed development land.

The trustee applied to the court for approval of a plan to dispose of some of the trust property, and whilst some of the beneficiaries agreed with the proposal two did not and felt that the issue should be mediated.  They applied to the court to force the other parties to engage in mediation.  That was considered by a Judge in the Business and Property Court in Leeds and she concluded that she did not have the power to order mediation because she was bound by a decision dating back to 2004.  However, she said that even if she had a discretion to order mediation, she would not have done so given the particular circumstances of the case.

The applicants asked the Court of Appeal to give them permission to appeal that decision, but the Court of Appeal did not consider it was a case which merited an appeal.

The Court of Appeal has just given judgment in another case on this topic; the question that court had to ask itself was could the court lawfully order parties to litigation to engage in a non-court-based dispute resolution process and if so, in what circumstances should it do so?

In 2004, the Court of Appeal said, “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.”  In looking at the question as to whether the 2004 judgment is binding on other court, the current Court of Appeal had to decide whether that statement was a necessary part of the reasoning that led to the decision in 2004.  The Court of Appeal has now decided that it was not.

It decided that courts do have a power to require parties to engage in a non-court-based dispute resolution process but that such a power must be exercised so as not to impair a party’s rights under the ECHR to have a dispute considered at a fair and public hearing within a reasonable time by an independent and impartial tribunal.

The next question that the court had to decide was whether it should exercise that power to stay proceedings or order non-court dispute resolution.  The Court of Appeal expressed the view that it is often beneficial for parties to a dispute to be able to settle their differences cheaply and quickly and even with initially unwilling parties, mediation can be successful in many cases.

The court said that whether the court should order or facilitate any particular resolution process is a matter for the court’s discretion.  The court should only stay proceedings to enable or force parties to engage in non-court based dispute resolution if the order that the court made did not impair a party’s right to proceed to a judicial hearing and if that was proportionate to achieving the aim of settling the dispute fairly, quickly and at reasonable cost.  With that in mind, the Court of Appeal said that it was not right to lay down fixed principles and it would not be desirable to, “provide a checklist or a score sheet for judges to operate”.

In the case on which we were advising, the outcome would not have altered even in the light of this very recent judgment.  The Judge decided that she did not have the power but said that if she had, she would not have ordered mediation on the facts, including the long history of the dispute.

In this new decision, the Court of Appeal has indicated that whilst the 2004 judgment should not be seen as tying courts’ hands in relation to ordering mediation, it is still relevant when the court comes to consider whether mediation or some other dispute resolution process is ordered or not.  It is looked at on a case-by-case basis.  It is certainly something that litigators will need to bear in mind in each and every case.

To speak to a member of our dispute resolution team, get in touch 0300 124 0406.