Private nuisance – Article 6 and the costs conundrum

23 July 2014 by David Hart KC

Coventry v. Lawrence [2014] UKSC 13, 23 July 2014, read judgment and Austin v. Miller Argent [2014] EWCA Civ 1012, 21 July 2014 read judgment

Two important cases in the last few days showing how difficult it is to find a fair way to litigate private nuisance cases.  Most of these claims have a modest financial value, but may raise complex factual and expert issues, even before you get to the law. The first case I shall deal with, Coventry, shows the iniquities of the recently departed system. The second, Austin, the dangers of the new.

Coventry is the sequel to the speedway case about which I posted in March – here. The”relatively small”  local speedway business ended up being ordered to pay £640,000 by way of costs after the trial. More than half of this was no-win-no-fee uplift and insurance premium combined. Indeed, the Supreme Court was so disturbed by this that they have ordered a further hearing to decide whether such a costs bill was in breach of Article 6 of the ECHR.

Austin is a claim concerning noise and dust affecting the claimant’s house close to an open-cast mine on the edge of Merthyr Tydfil: see pic. Before I go further, I should say that I represented Mrs Austin at an earlier stage of these proceedings.

In the present hearing, she unsuccessfully sought an order limiting the costs which she might have to pay if she lost the litigation (a protective costs order or PCO).

So each case is about a costs burden, which is capable of causing injustice to one or other party.

The critical difference between the cases is timing. In Coventry, the claimants were signed up to a conditional fee agreement (CFA) backed by ATE insurance prior to April 2013, when the rules changed about the recovery of uplift for the CFA and premium for the ATE. Mrs Austin and her neighbours did not have insurance (ATE) in place (see an earlier trip to the Court of Appeal here – the one I was involved in) when the rules changed.

Coventry

The judge had ordered the defendants to pay 60% of the claimants’ costs at the end of the original trial. Those costs turned out to be £398,000 base costs, an assumed conditional fee (CFA) uplift of £319,000 and an ATE premium of £350,000 – £1,067,000 all in, hence 60% giving £640,000. As Lord Neuberger explained, this was the “malign” influence of amendments made 15 years ago (to respond to the throttling back of civil legal aid); it had four “regrettable” features

(1) the claimants had no interest in their own costs – they would never have to pay anything, win or lose

(2) defendants would pay three times those costs – see this case by way of example

(3)  proportionality was not written into the assessment of the CFA uplift or ATE premium

(4) the stronger the defendants’ case, the more they would have to pay if they lost; both CFA uplift and premium would rise, as the claimants’ prospects fell.

So the defendants argued that this costs regime was in breach of Articles 6 and A1P1 of the Convention.They relied on MGN Limited v United Kingdom (2011) 53 EHRR 5and Dombo Beheer BV v Netherlands (1994) 18 EHRR 213. The argument seems to have had purchase with the SC. As Lord Neuberger observed at [41]

In the light of the facts of this case and the Strasbourg court judgments relied on…., it may be that the respondents are right in their contention that their liability for costs under the 1990 Act, as amended by Part II of the 1999 Act, and in accordance with the CPR, would be inconsistent with their Convention rights. However, it would be wrong for this Court to decide the point without the Government having had the opportunity to address the Court on the issue.

He went on to explain that Government involvement in a further hearing was desirable, because there was a prospect that the appropriate remedy was a declaration of incompatibility of the old system, rather than a “reading down”  of the system under section 3 HRA to make it Convention-compliant. Hence the case has been adjourned. However the fact of that adjournment, and the quote above, makes it plain that the Supreme Court has some sympathy with the defendant’s argument.

Austin

Sparing the defendants the full might of the CFA/ATE cost recovery regime has however affected claimants. Mrs Austin’s case is a good example. She does not have ATE insurance in place, and therefore came to court to ask for a PCO, failing which she said that the costs of the hearing would be prohibitively expensive. The judge accepted that she was of modest means, had no chance of public funding, and had a reasonably arguable case; he thought that others might benefit from the litigation, but that it was far from clear that there would be a wider impact of the case.

As I have explained before (e.g. here), an environmental judicial review gets the benefit of a standard costs cap of £5,000. This rule change was implemented to enforce the Aarhus Convention.

Aarhus

Mrs Austin’s point was that Article 9(3) the Aarhus Convention also applied to challenges to “acts or omissions by private persons”, so went well beyond judicial review of public authorities’ decisions. Hence, the obligation to avoid prohibitive expense in Article 9(4) extended to private law proceedings under Article 9(3).

The main argument in the case was whether she could place reliance on this provision, and if so, to what extent. She argued that first  UK law should be interpreted and applied in harmony with the UK’s international Convention obligations, and hence the discretionary powers of the court must be exercised so as to give effect to the Article 9(4) obligation to avoid prohibitive expense. Her second string was that Article 9(4) had become binding on the domestic courts via EU law, either because the Convention has, at least in part, been incorporated into the Environmental Impact Assessment Directive which is part of domestic law, or because the EU is itself a party to the Convention.

The Court of Appeal thought that actions by individuals formed a valuable additional method for enforcement of environmental law, and there was no reason in principle why a private nuisance claim could not fall within Article 9(3) and be protected by Article 9(4). Whether it did so would depend on whether the complaint was closely linked to the particular issues regulated by the Convention and would, if successful, confer environmental benefits.

The claimant had less success in seeking to link the complaints with the EIA Directive in which there was direct incorporation of Aarhus provisions. Equally, the CA rejected the argument that there was an EU right directly in play because enforcement of the planning conditions were in issue.

Similarly an attempt to argue that the court was bound to make a PCO because of the Convention failed. The CA’s answer to this has an element of deja vu for those doing public law in the 1990s – the arguments were redolent of the old pre-HRA days when litigants argued that the ECHR had effect in English law despite not being formally incorporated. The CA thought that the obligation under Article 9(4) was no more than a factor to be taken into account when considering whether to grant a PCO.

PCOs

Whilst it remained part of law that a private interest was of significance and relevance to the application for a PCO, it [42]

would not necessarily and in all circumstances defeat a PCO application

in reliance on the Litvinenko case (see my post).

The upshot

The judge declined to make a PCO. The CA agreed. The judge thought that whilst the issues might help those in the immediate vicinity, they might not help those in a wider area. Hence, the CA agreed, the public benefit was “relatively limited and uncertain”. Because of that, the claim did not fall within Article 9(3) of Aarhus. Even if it did, the strong element of private interest, alternative remedies, and the identity of a private body on the other side stood against making such an order. If the CA had made such an order, it would have made it in the sum of £7,500.

Conclusion

The headline from these two cases will be obvious. The Supreme Court in Coventry seems inclined to relieve the defendant of some of the impact of a regime which would have enabled Mrs Austin to start proceedings. But in the new regime, Mrs Austin and others in her position cannot get insurance to enable to bring proceedings, nor, in a typical case such as Mrs Austin’s,  can she and they get a protective costs order in their favour. No-one could possibly be inclined to advocate a return to the uncontrollable costs of the pre-2013 regime, but equally there needs to be some way of enabling Mrs Austin and others to bring a “seriously arguable” case with some certainty as to the worst outcome if they lose.

If Mrs Austin seeks and gets leave to appeal, perhaps it should be listed with the re-hearing of Coventry so that the Supreme Court can see both sides of the coin.

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