New expenses rules for environmental litigation in Scotland: protective or defective? — Dr Ben Christman
22 November 2018
The Scottish Government sets itself apart from its UK counterpart in its approach to protecting human rights. The SNP vocally opposed proposals to withdraw the UK from the ECHR and repeal the Human Rights Act. An expert group appointed by the First Minister Nicola Sturgeon will report this year with recommendations on how Scotland “can continue to lead by example in human rights”, and appears to be considering incorporating a range of rights from international human rights law into the Scottish legal system.
In environmental rights however, the lack of progress is conspicuous. As David Hart QC explained, the Aarhus Convention aims to protect the right to live in an environment adequate to health and wellbeing – the foundation on which other human rights are built. It recognises the rights of NGOs and members of the public to access information, participate in decision-making, and access justice. These rights encourage citizens to get involved in environmental decision-making. Article 9 requires that NGOs and members of the public must be able to challenge situations where their Convention rights are denied or national environmental laws are broken. Critically, access to justice must be “not prohibitively expensive”.
Yet environmental litigation (mainly judicial review) in Scotland is extortionate. Litigants face six figure bills if they lose. The Convention’s Meeting of the Parties and Compliance Committee (ACCC) have found Scotland to be non-compliant with the requirements of Article 9 (the latter has done so repeatedly). Instead of recognising this deficiency, recent Scottish Government consultation documents note Scotland’s “ongoing compliance” and disparage the Compliance Committee as “not a judicial body”.
2018 brings a new development. New protective expenses orders rules for environmental litigation in Scotland were created last week. This post examines these rules, and argues that they remain out of line with the Convention.
Protective costs/expenses orders
Adversarial justice systems are expensive for litigants. The general rule is that the loser pays their opponent’s legal costs – meaning that a litigant can end up liable for two sets of costs.
The UK’s attempt at mitigating this has been to create a system of ‘protective costs orders’ (protective ‘expenses’ orders – or PEOs – in Scotland, because we like to be different). They enable a person or NGO to go to court for an order at the outset of their case to cap their liability for adverse costs orders if they lose. This warms the ‘chilling effect’ of open-ended liability on willingness to litigate.
Three distinct regimes exist in England and Wales, Northern Ireland and Scotland. Statutory PEO rules have existed in Scotland since 2013, covering judicial reviews and statutory appeals in the Court of Session. These were amended in 2015. In 2017, the Scottish Civil Justice Council (SCJC) consulted on further reforming the rules.
The 2018 rules make a number of changes to the PEO system in Scotland. I start with the positive changes and move onto their problematic features.
1. Improved application process
The 2018 rules contain two positive developments. First, they improve the application process. Under the pre-existing system, PEO applications were usually decided using contested hearings. This ‘satellite litigation’ created extra costs.
PEO applications are now to be made by motion with the presumption that they will be decided without a hearing. Applications should address a set of prescribed subjects, but the rules stop short of the standard form application process recommended by the Faculty of Advocates.
Additionally, where a court refuses to award a PEO, the applicant’s liability is limited to £500 to the other side for the PEO application. This is an improvement on the pre-existing position, where no such cap existed. Given the purpose of the PEO regime, you might question why a PEO applicant should face any liability at all. The SCJC did not offer any reasoning to support this £500 limit or carry out any assessment of its affordability.
These changes should reduce the costs of applying for a PEO. However, the time-consuming nature of the work involved in applying means that the PEO application process will likely remain unaffordable for most.
2. Defining ‘prohibitively expensive’
PEOs are only awarded if a court determines that the proceedings will be ‘prohibitively expensive’ for the applicant. The second positive change is that the new rules define this term. A mix of objective and subjective factors are used which largely replicate Regulation 6 of the Northern Irish PCO rules (themselves derived from judgments from the CJEU and the UKSC):
(3) Proceedings are to be considered prohibitively expensive for the purpose of this Chapter if the costs and expenses likely to be incurred by the applicant for a protective expenses order—
(a) exceed the financial means of the applicant; or
(b) are objectively unreasonable having regard to—
(i) the situation of the parties;
(ii) whether the applicant has reasonable prospects of success;
(iii) the importance of what is at stake for the applicant;
(iv) the importance of what is at stake for the environment;
(v) the complexity of the relevant law and procedure; and
(vi) whether the case is frivolous.
Adjudicating where a case is prohibitively expensive should become simpler for courts, because the rules contain clear guidance for the judiciary on the factors to be taken into account. However the criteria are broadly-framed, so it remains to be seen how they will be interpreted in practice.
Before anyone rushes out to celebrate, three concerning features of the rules need unpacked.
1. Uncapped default caps
The pre-existing rules contained ‘default caps’ – the default position for a litigant with a PEO was that their liability to the other side was capped at £5,000 if unsuccessful; but they were only able to recover £30,000 from their opponent if successful. The old rules allowed for variations of the default caps in favour of a PEO applicant (i.e. to decrease the £5K cap or increase the 30K cap).
The new PEO rules make it possible to change the default PEO caps in either direction (i.e. potentially increasing the PEO applicant’s liability to their opponent or decreasing the applicant’s ability to recover their expenses if successful).
The test for changing the caps is “on cause shown”. This is a low test. Despite constituting a significant change to the PEO regime, this change was not highlighted in the SCJC’s consultation document to allow proper public consideration of its impacts. It will be attractive for respondents in most cases to seek to use this change in favour of less generous caps for PEO applicants – the likely result being that legitimate claims are deterred from proceeding and uncertainty is added to the system.
2. ‘Carrying over’ PEOs on appeal
Under the pre-existing rules, a PEO only covered the proceedings being contemplated at the time of application. This meant that if someone applied for a PEO for proceedings in the Outer House and won their case, but the respondent then appealed – (s)he would have to apply for a new PEO for the appeal in the Inner House.
The new rules create the welcome change that, where a PEO has been granted in the Outer House, its terms will also cover proceedings in the Inner House where the respondent appeals. Where the PEO holder appeals an Outer House decision however, they will have to apply for another PEO to cover the appeal in the Inner House.
The ACCC’s conclusion on this matter is unequivocal. Its 2017 report found that having to reapply for a PEO when filing an appeal:
… leads to uncertainty and additional satellite litigation, which itself adds further cost, at the appeal stage and accordingly is not consistent with paragraphs 8 (a), (b) and (d) of decision V/9n.
Additionally, if a PEO remains in place, its caps are static on appeal. So despite the legal costs increasing due to the additional work required of the PEO holder’s legal team to prepare and present their appeal (plus the additional costs of applying for another PEO if necessary), the ability of someone with a PEO to recover their expenses if successful will remain capped at £30K if successful on appeal.
The likely result of the 30K cap remaining static when carrying over on appeal is that the petitioner’s ability to pay for their legal representation will decrease when a PEO is carried over. This perverse outcome further tilts the inequality of arms in these cases.
3. No mandatory publication of PEO decisions
It is impossible to establish whether individual decisions are being made according to the rules or assess how the PEO system is working without the systematic publication of PEO application decisions. Yet there is no requirement for this, and the current approach to publication is irregular.
Publication is compulsory under Article 9(4), which requires that:
Decisions under this article shall be given or recorded in writing. Decisions of courts, and whenever possible of other bodies, shall be publicly accessible.
The SCJC was invited to address this in the consultation, but failed to make the necessary changes. It is odd that the necessity of transparency is not accepted in 2018.
Scotland’s slow crawl towards compliance
The new application process and definition of ‘prohibitively expensive’ are welcome changes. The new rules have made some improvements to the PEO system.
However, the rules are no panacea to Scotland’s longstanding non-compliance. Limited improvements do not excuse numerous deficiencies. The provisions for carrying over PEOs on appeal are manifestly non-compliant. Uncapping the default caps creates unnecessary uncertainty for litigants, a significant detrimental change which was not properly consulted upon. Sunlight is the best disinfectant – but nothing in the new PEO rules guarantees that its operation will be exposed to any curative rays.
Overall, the PEO system remains a limited mechanism to meet the Convention’s requirements. Access to environmental justice is an unaffordable luxury rather than a basic human right in Scotland. The Scottish Government should recognise and address the shortcomings of the Scottish civil justice system.
Dr Ben Christman is a trainee solicitor at the Legal Services Agency (Glasgow)