The price of protection

A Ministry of Justice consultation on the Protective Costs Order regime for environmental judicial review cases could have a major impact on all public interest cases, writes David Hart QC.

In a consultation announced recently, Cost Protection for Litigants in Environmental Judicial Review Claims, the Ministry of Justice is trying to get itself out of the multiple Aarhus problems facing UK justice. Infraction proceedings are threatened in the EU Court, and adverse conclusions were reached by Aarhus Compliance Committee.

The main problem is that the Aarhus Convention requires that environmental challenges not be “prohibitively expensive”, and everybody now appears to agree that the basic UK system of “loser pays the costs” does not achieve that objective without changes. So what does MoJ propose to do about it?

It says that costs protection should be provided via codification of the rules concerning Protective Costs Orders. That means that a claimant in any public interest case may ask the court for a PCO, to “cap” his liability to pay the other side’s costs to such a figure as does not deter him from bringing those proceedings. The boundaries of when a PCO can be ordered are much fought over – leading to more costs - but it certainly extends in principle to all public interest judicial review cases, not simply environmental ones. It is possible (at its very lowest) that PCOs can be made in public interest environmental challenges not involving judicial review, though there is not yet a decision either way on that.

The MoJ’s consultation paper proceeds on the basis that: “Case law has now moved to develop a strong presumption that a PCO will be granted where an environmental case is brought in the public interest.”

This is a helpful starting point, though not every defendant would agree with this summary of the present law.

The MoJ would apply PCOs to environmental judicial reviews only. It proposes that a PCO should be granted if, and at the same time as, permission to apply for judicial review is granted. The default figure for the cap is £5,000, so a claimant would not have to pay more than £5,000 if he went on and lost the judicial review. But his own lawyers’ costs are also to be capped, in the sum of £30,000. There should be no order for costs of the PCO application if granted in these default terms. (If the claimant does not get permission, then he will have to bear the other side’s costs to that point, though the courts have always been keen to limit these.)

A defendant may apply to remove the cap if there is publicly available information suggesting that the claimant is not in need of costs protection – but the defendant cannot require the claimant to disclose his means.

The MoJ has no specific proposals on appeals – either they should be included in the £5,000 cap (making a zero cap on appeal, because the £5,000 will have been spent before the case gets to the Court of Appeal), or there should be another cap – which the claimant may not be able to afford, and it may not be his appeal anyway. This diffidence about proposals on appeals is understood but when the rules come to be drafted, there must be some regime for this, otherwise claimant lawyers will not be able to answer that critical question from their clients – what is the maximum which I might end up paying if I lose either before the judge or in the Court of Appeal?

The justification for the £5,000 cap is at [35]: any claimant who is so impecunious that he is deterred insuperably from litigating by the loss of £5,000 would qualify for legal aid and would get the costs protection which comes with getting legal aid. Lots of questionable assumptions there, namely that any meritorious environmental challenge is and will remain within the scope of legal aid, and that every claimant who cannot afford a lump sum of £5,000 qualifies for legal aid.

So, from the basic proposal, to some first thoughts on what it does and does not cover.

(1) The paper explicitly addresses only environmental judicial reviews, whereas the Aarhus Convention extends its protections via Article 9(3) to “…judicial procedures to challenge acts and omissions by private persons and public authorities which contravene provisions of its national law relating to the environment.”

So the UK would remain in breach if its environmental justice system did not enable people to sue private persons in those circumstances without prohibitive expense.

(2) The consultation does not say how precisely it is going to codify the underlying rules as to PCOs as to make them Aarhus-compliant. There is a good deal of controversy in the cases, starting with Corner House, and in particular its requirement that a claimant seeking a PCO must not have a private interest in the litigation. Later cases have diluted if not ignored that principle whilst paying lip-service to it, so a bit of clarification is sorely needed to stop the arguments. Most public environmental litigation is started by people with mixed motives – the development or activity is local to them, and stopping or controlling it or enforcing the law is also in the general public interest.

(3) The consultation is silent as to how it defines “environmental” judicial review. This is incredibly important. Environmental judicial review is only one element of public interest judicial review. Depending on the ultimate rules and the size of the caps, some parties will want to opt into this PCO regime, some will want to opt out. The courts have seen this coming in the past, and have done their best to suggest that common rules about PCOs should apply to environmental and non-environmental public interest cases.

The grown-up thing for the MoJ to do, if, as one hopes, this process were about improving access to justice generally, rather than fire-fighting the European Court and Arhus Compliance Committee, would be to bring in rules applicable to all public interest judicial review cases, thus preventing a lot of sterile arguments at the permission stage about whether a claim is “really” an Aarhus environmental claim.

(4) On the claimant’s means and its potential relevance to the grant of a PCO, the consultation paper omits reference to a very important dispute which is going to the CJEU in due course, in the case of Edwards/Pallikaropoulos, referred to it by the Supreme Court. The European Court is being asked to decide whether the EU Public Participation Directive requires “prohibitive expense” to be judged from a subjective stand point (the individual claimant asking for the PCO) or an objective one (claimants generally). The Supreme Court at [31] tended to prefer the latter: “It is clear that the test which the court must apply to ensure that the proceedings are not prohibitively expensive remains in a state of uncertainty. The balance seems to lie in favour of the objective approach, but this has yet to be finally determined.”

It is not explained how the consultation proposals are designed to mesh in with the issues in Edwards, and its outcome.

And on a more practical level, what does the MoJ really mean by “publicly available information” on the claimant’s resources? Understood, this includes publicly filed accounts, showing that the company claimant has assets of £x or the individual claimant director earned £y last year. But presumably, this would include Land Registry documentation (what the claimant paid for his house 10 years ago).

The MoJ should not underestimate the determination of defendants to repel the grant of a PCO, because often that can bring the threatened litigation to an end, whatever its underlying merits.

The short way out of this problem would be for the MoJ to prefer the views of the Supreme Court that the objective approach is the right one, thus banishing a lot of expensive argument on behalf of both parties. If the odd superstar gets to contest a genuinely environmental claim at modest expense, so what, in the long run?

The closing date for the consultation is 18 January 2012. It is worthwhile responding even if you are not an environmental lawyer. The PCO regime for environmental judicial review cases is likely to have implications for all public interest cases, if only because the natural impulse of the courts will be to try to bring the rules as close together as can be practically achieved.

David Hart QC is a barrister at 1 Crown Office Row. This article first appeared on the set's UK Human Rights Blog.