Costing the planet: should environmental cases have a free run?

30 November 2010 by

Big business between government and property developers may be at risk from public interest challenges in the courts if current obstacles are removed.

Following  critical findings by a UN environmental body, the Government has set out its latest proposals for allocating the costs burden in environmental cases.  The current position is that an applicant who seeks to dispute the lawfulness of a decision, say, to grant permission for a development, will only  get a court order preventing commencement of construction if they are prepared to pay for the developer’s loss should their claim fail at the full trial of the merits.

Since judicial review is the first and only port of call for the great majority of environmental complaints by parties not involved in the original contract between the developer and public authority, it is gratifying that some soul-searching is being undertaken in this area.  But a differential costs regime  may well entail prolonged preliminary litigation as to what qualifies as an “environmental” case, thereby defeating the very purpose of the Aarhus Convention, which is to open up the judicial coffers to proper public interest challenges.

The essence of Aarhus is the requirement that participating states should make available a review procedure for environmental decisions which is ‘fair, equitable, timely and not prohibitively expensive’.  The UK has generally taken the line that its legal system complies  well enough. But the Committee set up to assess this compliance doesn’t necessarily agree.  Amongst other things, the Committee has indicated that the judicial discretion to order a cross-undertaking in damages in environmental judicial review cases may well amount to “prohibitive cost” , in breach of Article 9(4). Cross undertakings can lead to “prohibitively expensive procedures” – liabilities of thousands pounds for claimants legitimately pursuing environmental concerns that involve the public interest.  Ultimately the question seems to turn on  judicial discretion, and the failure of this system to satisfy the Aarhus obligations.The ECJ made some dark hints in this direction in C-427/07 (Commission v. Ireland).

The requirement also of course impinges on the broader access to justice requirement set out in Article 9(3). There is, apparently, no clear case law on the subject – presumably because these challenges founder before they have the chance to crystallised in the law reports. The “paradigm case” is where someone is trying to stop a development site – a plant or a wind farm – where it is alleged will cause environmental harm e.g. destruction of a wildlife habitat.  In theory, the court has a discretion whether to impose a cross undertaking; in practice the presumption is that such an undertaking will be ordered and the claimant will therefore be liable to pay compensation to the developer  if the court subsequently decides that the injunction should not have been given and the party subject to the injunction suffers a quantifiable financial loss as a result of complying with that injunction.

The problem is that there is no clarity as to when and in what circumstances the court will decide not to enforce the cross-undertaking. Given the lack of certainty over the extent of any potential liability, a claimant with insufficient resources to provide a cross-undertaking may proceed without an injunction with the result that, even if their challenge is ultimately successful, it could be frustrated if the developer has proceeded with the development and, for example, destroyed a fragile species habitat by making changes to the character of the land.

From a developer’s point of view it might be argued the uncertainty problem was settled long ago by American Cyanamid, with its strict critera  for the grant of an interim injunction. Before allowing an applicant an order, preventing the issue of a licence or permission or anyway stopping development taking place, the court must decide where the balance of convenience lies. Is there an “uncompensatable” disadvantage either way?  Can this disadvantage be offset by some counterbalance to an injunction? The cross undertaking in damages is sewn quite tightly in to this fabric.

That is the serious, practical question. The other aspect, potentially arguable by the other side in this debate, concerns  the rights of the third party developer under Article 1, Protocol 1 and Article 6 of the European Convention on Human Rights.  This is a nod in the right direction, although the reality is that interferences with A1P1 rights are almost invariably justified by the public interest. Any argument that due process rights are breached by failure to protect the defendant’s position should the claimant be unsuccessful at trial should surely be countered by the claimant’s Article 6 right of access to court which is itself protected by Article 9(3) of the Aarhus Convention and by the case law of the ECtHR under Article 6 (Airey v Ireland Series A No 32 (1979) 2 EHRR 305; Golder  v United Kingdom Series A No 18 (1975) 1 EHRR 524).

If there is heart for a regime change, the question is how to go about it. There are a range of difficulties to be overcome in introducing new criteria for costs orders. The disadvantage of a Supreme Court decision is that it depends on the appropriate case to travel the long route through the lower courts to an appeal; a Practice Direction issued by the Master of the Rolls is one solution. An alternative would be to seek to clarify the factors that a court will take into account by way of an amendment to the CPR, which is in itself authoritative and final.

The consultation paper proposes that the court should grant an interim injunction in judicial review proceedings without a cross-undertaking for damages (or alternatively accept an undertaking to refrain from action from the defendant without a cross-undertaking for damages from the claimant) where:

  • the Environmental Impact Assessment Directive (85/337), as amended by the Public Participation Directive (2003/35), is engaged and,if an injunction were not granted
  • a final judgment in the matter would be impossible to enforce because the factual basis of the proceedings will have been eroded and bringing the case on quickly for trial would not resolve the problem
  • significant environmental damage would be caused; and
  • the claimant would probably and reasonably discontinue proceedings or the application for an interim injunction if a cross-undertaking in damages was required.

A paper summarising the responses to this consultation will be published in Spring 2011.

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