Landlords have been warned that a Court of Appeal decision issued late last week will mean that in future it is very likely that they will be compelled to settle their differences with tenants via an ombudsman before going to court.

The Churchill vs Merthyr Tydfil Council case involved a home owner in the Welsh town who had tried to take the council to court over a knotweed invasion of his garden from adjoining local authority land.

Mr Churchill had moved to use the courts to make the council fix the problem, but its officials had insisted he go through their internal alternative dispute resolution (ADR) process first.

He refused and issued legal proceedings, which the council asked to be suspended until ADR was completed.

The court of appeal has upheld, in a limited way, that the council is right and that judges can compel litigants to undertake ADR first before going to court.

Leans heavily

Property law expert Priya Sejpal of JMW Solicitors says the case shows that the Court of Appeal ‘leans heavily’ towards enabling the use of ADR.

This is important for landlords because, when the Renters (Reform) Bill goes live next year, it will force landlords to join a redress scheme, which is one form of ADR, as letting agents are already forced to do under the current legislation via either the Property Redress Scheme or The Property Ombudsman.

She adds: “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.”

Reaction

Sean Hooker (pictured), Head of Redress at the PRS, says: "This case puts clearly in the mind of judges the importance of alternative dispute resolution. Which is positive.

"However, most non-court processes rely heavily on cooperation between the conflicting parties, so a forced settlement rarely works as satisfactorily as if they enter into it willingly.

"We also saw from the failed mediation pilot that mediation on the door steps of the courthouse is not the answer. The cases have often become too fractious and irreconcilable by then.

"Early intervention is essential. That said, too many people do not realise how effective, quick and cost efficient ADR very often is, so trying it out may well be a revelation.

"So if you are likely to be pushed down that route by a judge, the sensible thing is to engage in the process pre-court and even if it is not successful you will not fall foul of the bench.”