The Supreme Court on “prohibitively expensive” costs: Aarhus again
11 December 2013
R (Edwards & Pallikaropoulos) v. Environment Agency et al, Supreme Court, 11 December 2013 read judgment
This is the last gasp in the saga on whether Mrs Pallikaropoulos should bear £25,000 of the costs of her unsuccessful 2008 appeal to the House of Lords. And the answer, after intervening trips to the Supreme Court in 2010 and to the CJEU in 2013, is a finding by the Supreme Court that she should bear those costs.
The judgment by Lord Carnwath (for the Court) is a helpful application of the somewhat opaque reasoning of the European Court on how to decide whether an environmental case is “prohibitively expensive” per Article 9(4) of the Aarhus Convention, and thus whether the court should protect the claimant against such liabilities. The judgment also considers the guidance given by A-G Kokott more recently in infraction proceedings against the UK for breaches of that provision: see my post.
But note that the dispute has been largely overtaken by recent rule changes, and so we should start with these before looking at the judgment.
Current Aarhus claims
There are rules governing protective costs orders at each step of the court hierarchy.
(i) At first instance, per CPR 45.41 to 45.44 & Practice Direction 45, someone who after 1 April 2013 brings a judicial review “all or part of which is subject to the provisions” of the Aarhus Convention may not be ordered to pay costs exceeding £5,000 for individuals and £10,000 for others. Costs recovery against a losing defendant (the reciprocal cap, in the jargon: see my post) is usually capped at £35,000. There are also provisions to deter expensive arguments about whether a case is an Aarhus case. If the claimant loses the point, normally no order for costs. If the defendant loses, normally the claimant will get his or her costs on an indemnity basis, even if the total is taken beyond the £35,000.
(ii) On appeal, there are separate rules in CPR 52.9A governing costs recovery, and in particular the need for a prospective order to be made as soon as practicable and on paper, unless the court otherwise orders.
(iii) Finally the Supreme Court may make an order limiting costs recovery in an Aarhus claim (Costs Practice Direction, as amended in November 2013).
Mrs P’s appeal had a somewhat unusual history, to say the least. The claim started in the name of another claimant (Mr Edwards) who had the benefit of legal aid, and thus costs protection. He had sought judicial review of a decision by the Environment Agency in 2003 (sic!) to allow a cement works to burn waste tyres as an additional fuel. He lost in front of the judge, and, during the hearing of the appeal, withdrew instructions from his legal team. Cue Mrs P, avidly listening in court, who stepped in to take the case over. Her costs were there and then capped at £2,000, which she paid when she lost.
Mrs P then sought to appeal to the House of Lords. The then rules provided that an applicant provide security in the sum of £25,000. She unsuccessfully sought variation of this, and accordingly was required to pay this into court.
So the upshot of the Supreme Court’s current ruling is that she does not get her £25,000 back – a situation unlike most protective costs fights where the issue is whether the claimant is exposed to a costs burden in the future.
This simple fact weighed heavily with the Supreme Court. Mrs P was not in fact deterred from litigating the case in the House of Lords, and the Supreme Court was ultimately unimpressed with the merits of her claim. The context was thus very different from the far more common case where the liability is prospective: .
At  Lord Carnwath set out the CJEU learning which amounts to this:
1. The test of prohibitive expense is not purely subjective. The cost of proceedings must not exceed the financial resources of the person concerned nor appear to be objectively unreasonable, at least in certain cases.
2. The CJEU did not give definitive guidance as to how to assess what is objectively unreasonable.
3. The court could take into account the merits of the case: that is “whether the claimant has a reasonable prospect of success, the importance of what is at stake for the claimant and for the protection of the environment, the complexity of the relevant law and procedure, the potentially frivolous nature of the claim at its various stages.”
4. That the claimant has not in fact been deterred for carrying on the proceedings is not itself determinative.
5. The same criteria are to be applied on appeal as at first instance – though an appellate court should bear in mind what had already been spent on the case.
Step 3, the merits, is less than self-explanatory, and so Lord Carnwath provided the following expansion of the CJEU’s reasoning at 
i) A reasonable prospect of success. Lack of a reasonable prospect of success in the claim may, it seems, be a reason for allowing the respondents to recover a higher proportion of their costs. The fact that “frivolity” is mentioned separately (see below) suggests that something more demanding is envisaged than, for example, the threshold test of reasonable arguability.
ii) The importance of what is at stake for the claimant As indicated by Advocate General Kokott, this is likely to be a factor increasing the proportion of costs fairly recoverable. As she said, a person with “extensive individual economic interests” at stake in the proceedings may reasonably be expected to bear higher risks in terms of costs.
iii) The importance of what is at stake for the protection of the environment Conversely, and again following the Advocate General’s approach, this is likely to be a factor reducing the proportion of costs recoverable, or eliminating recovery altogether. As she said, the environment cannot defend itself, but needs to be represented by concerned citizens or organisations acting in the public interest.
iv) The complexity of the relevant law and procedure. This factor is not further explained. Its relevance seems to be that a complex case is likely to require higher expenditure by the respondents, and thus, objectively, to justify a higher award of costs…
v) The potentially frivolous nature of the claim at its various stages. The respondents should not have to bear the costs of meeting a frivolous claim. In domestic judicial review procedures, whether at first instance or on appeal, this issue is likely to be resolved in favour of the claimant by the grant of permission.
Applying these to Mrs P’s case, the case was evidently a complex one (it took 3 days in the House of Lords), and Lord Carnwath thought that the points of law at stake were of limited practical importance for the environment by the time it had got to the House of Lords. He also considered that the prospects of obtaining a final order in Mrs P’s favour were “highly questionable” because even if there had been an error of law, there was a serious risk of the court’s discretion being exercised against her, as had happened in the courts below: .
in the special circumstances of this case the figure of £25,000…is neither subjectively nor objectively successful. 
That last sentence is key. The Supreme Court has made it clear that this was indeed a special case. Mrs P had paid the money, and the Court could take a long hard look at the merits of the claim in retrospect and as already determined. They evidently thought that there was no good reason why she should get her money back.
In my view, there is nothing in the ruling which should encourage defendants to dispute the application of the default £5,000 protective costs order now contained in the rules. If a judicial review claim has enough merit to clear the arguability hurdle and thus get permission from the court, no first-instance judge looking at the application is going to welcome expensive micro-argument from defendants about just how meritorious, complex or unimportant the claim is. Any different approach, and arguments about “prohibitive expense” will themselves become prohibitively expensive.
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