Key changes to the Protective Cost Order regime (PCO) came into force on 28 February 2017, which could directly limit the ability of individuals and organisations to bring environmental-related legal challenges in England and Wales.

Background

The PCO was introduced in 2013 in part due for the purposes of implementing the Aarhus Convention and its requirement that public bodies ensure that the public have access to procedures that are not “prohibitively expensive” for challenging decisions relating to the environment. For environmental-related proceedings, adverse legal costs were capped to £5,000 for individuals and £10,000 for organisations. Before these caps were introduced, the risks of substantial adverse costs orders could deter organisations from bringing public interest litigation. For example, in 1998, WWF was ordered to pay the government’s legal costs of over £200,000 after losing its legal challenge against the construction of a funicular up Cairngorm Mountain.

The government’s changes, implemented through The Civil Procedure (Amendment) Rules 2017 retain the same costs limits as a starting point, but the court can depart from them if it is satisfied that “to do so would not make the costs of the proceedings prohibitively expensive for the claimant”, and that the costs would not “exceed the financial resources of the claimant” or be “objectively unreasonable.” In practice, the court will carry out an assessment of the claimant’s financial resources in order to determine whether it would be fair for the applicant to bear a more significant degree of risk.

In assessing the reasonableness of potential costs, the court must consider the following factors: “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.”

Possible Implications

The fixed caps had previously provided certainty of costs and protection for third parties. Without the certainty afforded by these fixed caps, claimant organisations will need to consider the risks of adverse costs more carefully before launching legal challenges, and will need to allow greater scrutiny of their financial affairs through the court’s means testing process.

It remains to be seen how the court will approach and interpret these new rules, particularly with respect to the meaning of “objectively unreasonable” costs and how the reasonableness of costs may relate to the public interest at stake in any particular case. This will be interesting where a development project is consented to, on the basis of, for example, an Environmental Impact Assessment, which concludes that the scheme will not have a significant environmental impact, but a challenge is then pursued based on the way a decision is made.

Reactions

The Ministry of Justice has emphasised that these changes will ensure that individuals are not expected to pay legal costs above their means, reiterating that “legal aid remains available for these cases”. Despite this, a House of Lords statutory instruments committee concluded on 3 February 2017 that “people with a genuine complaint will be discouraged from pursuing it in the courts.” These changes have also been criticised by a UN committee charged with reviewing access to the courts in the UK – it was concluded that the government was not yet meeting its legal obligations on access to justice under the Aarhus Convention and this did not improve the position.

ClientEarth, Friends of the Earth and the RSPB have recently launched a judicial review challenge of this decision and this case will be heard in the coming months. In a joint statement, these groups highlighted that charities and non-governmental organisations are the main way in which people can mount an effective challenge to governmental decisions, emphasising that “access to justice, on equal terms, is everyone’s right.”

ClientEarth has also emphasised that under this new regime, it would not have been able to bring a successful claim against the UK government over air pollution. This enabled the organisation to demand tougher measures from the government to improve air quality in the UK.

Conclusion

Transitional arrangements are in place for environmental claims already in the courts but any new challenges will fall under the scope of this new regime. Any decisions on new applications for PCOs will be instrumental in determining the true impact of this regime change on public interest litigation relating to the environment, as well as on access to justice more broadly.

This post was prepared with the assistance of Ei Nge Htut in the London office of Latham & Watkins.