What did the Court decide?
Without getting into the background detail, the Court of Appeal concluded that a court does have the power to order a stay of proceedings to compel the parties to enter into negotiation, mediation, early neutral evaluation or any other kind of dispute resolution (such as a complaints procedure like that of Merthyr Council).
What does this mean for Landlords?
It is a decision that residential landlords, especially local authorities and housing associations, will welcome in the context of disrepair claims.
The Pre-Action Protocol for Housing Disrepair Cases (Wales) sets out the steps that parties should take before issuing proceedings. This includes a very clear statement that before using the Protocol, a tenant should make sure that their landlord is aware of the alleged disrepair.
It also includes a provision that, even if the landlord is on notice and has not rectified the issue(s), the parties should consider whether a form of alternative dispute resolution would be more suitable than litigation. Landlord complaints procedures are explicitly named as one of the potentially suitable options.
Despite these very clear provisions, often tenants, and claimant law firms, will send a letter before claim or issue proceedings before even attempting to engage in any available ADR, such as a complaints procedure, or even informally raising issue with the Landlord.
Capital’s property litigation team have previously been successful in their applications to the court for a stay of proceedings, resulting in orders that the tenant must engage with the landlord’s complaints procedure. However, in the past, these judgements were not always found in the Landlord’s favour as there was no authority to rely upon. It is hoped that following the Churchill judgement, it will be easier to persuade a court to order a stay for the purpose of engaging in ADR.
How will things change moving forward?
Hopefully, the decision in Churchill will encourage parties to reconsider instructing solicitors to issue a letter before claim or proceedings, and instead tenants will first be advised to engage in the landlord’s ADR process. In instances where this is not the case, parties can expect adverse costs consequences as a result of their refusal.
If you or your business require advice in relation to the above, please contact us Aisling and Clare.
