Aarhus and environmental judicial review: cracking legal costs per Jackson LJ

2 February 2012 by

In October 2011, I posted on an important consultation, Cost Protection for Litigants in Environmental Judicial Review Claims, in which  the Ministry of Justice wheeled out its proposals to get it out of the various scrapes caused by the expense of environmental challenges.  The Aarhus Convention requires that environmental challenges not be “prohibitively expensive”, and both the European Commission and the Aarhus Compliance Committee don’t think that the English system complies – it costs way too much.

In a nutshell, MoJ were suggesting that there should be a starting point in the form of costs orders designed to protect unsuccessful claimants against excessive costs incurred by successful defendants – unsurprisingly called Protective Costs Orders. If a Claimant got permission to challenge an environmental decision, but then lost on a full judicial review hearing, he or she should have to pay no more than £5,000. In return, he should not be able to recover any more than £30,000 if he won. MoJ’s consultation period has now closed, and a very significant response has been received from Lord Justice Jackson, who recently carried out a set of mammoth reviews of litigation costs in all areas of the law.

He agrees with MoJ – sort of. The difference is that he would simply fix costs, rather than do it via a system of Protective Cost Orders. He would also allow defendants to apply to set aside a fixed costs order where the claimant is sufficiently well off to meet the full costs of the action (the MoJ also recommends this). But he also suggests that defendants should be restrained from such applications by bearing the costs in all cases, and, in the event that they lose, being liable to pay the claimant’s costs of opposing the application. This would cover, for instance, a multi-national challenging the grant of planning permission to a rival company.  More difficult is the case of a challenger who is reasonably comfortably off, with a nice enough house, but who does not have the capital to dedicate to paying the costs of a full-blown judicial review were he to lose – and remember, many environmental challenges are pursued for altruistic reasons. Jackson LJ thinks that this will be copper-bottomed compliance with Aarhus. I am not so sure.  The EU Court considers that the test of prohibitive expense in the Aarhus Convention (as incorporated into EU law) is objective and not tailored to the specific means of the claimant, and this was the provisional view of the Supreme Court in Edwards. Jackson LJ readily acknowledges that such an exception to the fixed cost regime will have to be carefully drafted – indeed so, otherwise it will trigger a form of satellite litigation which he understandably deprecates when it takes the form of deciding whether a PCO should be granted.

The other exception is at the choice of claimants. They can opt out of this regime. So if a claimant is prepared to forego limiting his own costs liability to £5,000, then his entitlement to recover costs if successful should also be at large – he can claim more than £30,000. Jackson LJ points out that such a provision has analogies in the tax field. In tax appeals to the First-Tier Tribunal the taxpayer has a right to opt in or out. Interesting this, but also ripe for painful conflicts of interest between solicitor and client. Client very happy to cap his costs liability at £5,000, if he loses. Solicitor thinks that, if the client opts out, he, the solicitor, is far more likely to recover, say, £100,000 if he wins on a fully contested and difficult case. (Recovering £100,000 from your successful client where your client’s recoverable costs are capped at £30,000 is unlikely to be a happy pastime for any lawyer). You might say to yourself – well, the solicitor is being greedy – but if they both face, say, a public body supported by an interested party who has £250,ooo to spend warding off a challenge, you will see the point. Because none of these caps stops a party spending what he likes on a case, even if he cannot recover it from the other side. Hence, the problem of equality of arms which (to a modest extent) is recognised by the disparity between the £5,000 and the £30,000.

This fixed costs regime is the suggested way ahead for environmental judicial reviews (counting under that head all claims under the EU Public Participation Direction). But what about the non-environmental judicial review, where at the moment the claimant has a PCO regime available only in limited circumstances – including a criterion that the claimant could not pursue the claim but for a PCO?  Jackson LJ has in mind the development of his fixed costs world into this area. The courts would certainly like this, rather than having an odd little palisade behind which Aarhus cases sit, though whether the wider range of interests seen over the whole field of public law challenges would agree is another matter.

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