Compulsory stay of proceedings and use of ADR is welcome news for social landlords, where used appropriately

The Court of Appeal’s recent decision in Churchill v Merthyr Tydfil County Borough Council is welcome and refreshing news for many.

Despite being a claim about Japanese Knotweed, the implications of the claim will have far reaching consequences, especially for social landlords dealing with high volume litigation such as Housing Conditions claims.

Briefly summarised, the Court has decided that it can lawfully stay issued Court proceedings for, or order, parties to engage in a non-court based alternative dispute resolution (“ADR”) process. This has been a matter of contention for some time between practitioners which would ultimately have had an impact on how Court proceedings would have been addressed (often resulting in more legal costs for both parties).

Naturally, there is a caveat that any such order must:

"Not impair the essence of the Claimant’s right to proceed to a judicial hearing"; and

Be "proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at a reasonable cost"

However, it is difficult to perceive when legitimate ADR wouldn’t tick these boxes. But why is this particularly exciting for social landlords?

It is no secret that the Social Housing sector and its landlords are being inundated by Housing Conditions claims or Housing Disrepair claims, many of which are brought by law firms who are instructed on a “no win, no fee” basis.

This can sometimes result in aggressive litigation against social landlords where, commercially, it may appear better to settle a claim rather than dispute it up until trial, which would often involve the condition that at least some of the tenant’s legal fees are paid for by the social landlord.

Now that the Court of Appeal has clarified that proceedings can be stayed for ADR, more tactics are easily available to social landlords with less risks involved. For instance, it could be easier to take a more bullish stance against a “try on” claim before or even after it has been issued tactically.

Further, after a claim has been issued but before substantial legal costs are incurred in preparing for trial, it could be easier to persuade a Court that the claim should be stayed, and that ADR should be used. This is especially if the claim, arguably, shouldn’t have been issued in the first place, such as due to a breach of the relevant pre-action protocol. As such a social landlord could arguably have more control over its position and adopt a more bullish stance from the beginning, where appropriate, with less concerns if the tenant did issue proceedings.

In Churchill v Merthyr Tydfil County Borough Council, the Council argued that such suitable ADR should include its own internal complaints procedure, although this was not decided by the Court of Appeal.

We would argue that the Court’s decision should further encourage a social landlord to use its internal complaints procedure to address Housing Conditions claims. This is something that we have long advocated for and continue to do.

There are vast benefits available to both parties for using a social landlord’s internal complaints procedure, pursuant to the civil procedure rules and paragraph 4.2 of the Pre-Action Protocol for Housing Conditions Claims (England). Notably, it can resolve matters far more cost-effectively, amicably, and quickly (ticking those earlier boxes). From our experience, this approach often achieves excellent results for our clients when appropriately used, drastically reducing the legal costs that would otherwise be incurred.

Whilst we are strong advocates for the use of a social landlord’s internal complaints procedure, the policy and procedure itself must be up to the task. Further, to ensure its success along with any other form of ADR, careful consideration will have to be given to the “relevant factors” mentioned in Churchill v Merthyr Tydfil County Borough Council, when the Court will consider whether to order a stay for the use of ADR.

If a social landlord’s internal complaints procedure isn’t suitable then other more traditional forms of ADR are, of course, available, including mediation and early neutral evaluation. However, these are likely to cause both parties to incur more legal costs, although they will still often be more cost effective than to let an issued claim proceed to trial.

If you have any questions regarding this article or would like advice or training in relation to the above, please do not hesitate to get in contact. We would be more than happy to assist.

Author: Dominic Robson

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at December 2023. Specific advice should be sought for specific cases. For more information see our terms & conditions.

Date published

19 December 2023

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