New costs cap regime in force for environmental cases

Out-Law News | 03 Mar 2017 | 5:19 pm | 4 min. read

Courts in England and Wales have new powers to change the maximum cost liabilities that those challenging environmental decisions of public bodies' through judicial review could be exposed to under new rules that are now in force.

Planning expert Elizabeth Wiseman of Pinsent Masons, the law firm behind, said that these changes mean "that claimants will no longer be guaranteed automatic costs caps which bringing judicial reviews against planning decisions of the local planning authority".

The reforms, contained within the Civil Procedure (Amendment) Rules 2017 and the Criminal Justice and Courts Act 2015, came into force on 28 February, and apply to so-called Aarhus Convention claims.

The Aarhus Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters was implemented in the EU by the Public Participation Directive and requires public bodies to ensure that the public have access to a procedure to challenge decisions relating to the environment to the extent permitted by national law. Amongst other things, the Convention says that this procedure should not be "prohibitively expensive".

Under the new rules courts can vary or remove the limits on the maximum costs liability of any party in an Aarhus Convention claim subject to new conditions.  According to environmental law expert James Nierinck of Pinsent Masons the changes provide a "means of assessment to obtain the established caps".

To depart from the established £5,000 cost cap for individuals and £10,000 cap for organisations the court must be satisfied that "to do so would not make the costs of the proceedings prohibitively expensive for the claimant". In practice, this will involve a degree of scrutiny of the claimant's financial resources, details of which must now be provided in order to obtain a costs cap.

Nierinck said: "The information claimants will have to provide about their financial resources and the financial support by third parties will be likely to lead to a higher degree of scrutiny of a claimants' financial resources, which may represent an unwelcome intrusion into their financial affairs. Although some have characterised this as an affront on access to justice in environmental matters, others will welcome a degree of financial transparency such that those bringing environmental claims against public bodies bear a degree of financial risk proportionate to their means."

The court must satisfy itself that the costs of the proceedings would be prohibitively expensive for the claimant without the variation being applied in cases where a variation would either reduce a claimant’s maximum costs liability below those set out above or increase that of a defendant beyond the established £35,000 cap.

Likely costs, including court fees, will be deemed to be ‘prohibitively expensive’ if they either "exceed the financial resources of the claimant; or are objectively unreasonable".

In assessing reasonableness of likely costs, the courts must consider "the situation of the parties; whether the claimant has a reasonable prospect of success; the importance of what is at stake for the claimant; the importance of what is at stake for the environment; the complexity of the relevant law and procedure; and whether the claim is frivolous".

Courts must also consider any financial support which any person has provided or is likely to provide to the claimant.

The reforms apply to Aarhus Convention claims brought by judicial review or review under statute, but cost capping provisions under sections 88 to 90 of the 2015 Criminal Justice and Courts Act do not apply to judicial review proceedings commenced on or after 28 February 2017 to which the separate costs protection regime for Aarhus Convention claims applies.

The UK government was forced to review the framework in England and Wales for implementing the Public Participation Directive following a ruling by the EU's highest court in 2014.

The Court of Justice of the EU (CJEU) said at the time that previous rules did not "ensure the claimant reasonable predictability" about the ultimate cost of legal fees, including the ability of judges to impose a 'cross cap' on the amount that a successful challenger could claim back from the public body and the fact that the rules did not take into account an individual challenger's financial position.

Environmental organisations have expressed concerns about the new amendments which has led to a challenge being made in the courts by ClientEarth, Friends of the Earth and the RSPB.  The case will be heard in the coming months.

Wiseman said: "The changes that have come into force this week have been met by serious concern from a number of environmental campaign groups which are seeking to challenge the changes through the courts. They are concerned that the increased costs risks will be a deterrent to challenge planning decisions that will prevent access to justice on equal terms.  However, it is not the government’s intention that claimants will be exposed to prohibitive costs but rather that the costs of bringing environmental challenges must not be prohibitively expensive by ensuring that individuals are not expected to pay legal costs above their means."

The requirement to provide evidence of financial means and the increased financial risk may lead to the number of cases being brought being reduced.  However, it may be simply that the numbers of frivolous claims are reduced with claimants with a genuine complaint taking comfort in the well-established loser pays rule, said Wiseman. Claimants should remember that they can also argue that the existing costs caps can be reduced further if they can demonstrate that the costs of proceedings would be prohibitively expensive. 

"Defendants will welcome the changes as it will give them an opportunity to recover some of the significant expenses incurred in defending an environmental challenge which can sometimes be frivolous," said Wiseman. "However, defendants should be warned that the changes mean that the courts now have discretion to increase the £35,000 costs cap if the claim succeeds.

"Despite the on-going challenge currently claimants will be entering into so-called Aarhus claims with no guaranteed minimum costs exposure.”