The European Court of Justice (ECJ) has ruled that in deciding whether the costs of bringing a claim on an environmental matter are “prohibitively expensive” it is not enough for national courts simply to consider the applicant’s financial situation, it must engage in an objective analysis of the costs.
The ECJ delivered its judgment last week following a referral from the Supreme Court in relation to a domestic environmental claim. Ms Pallikaropoulos (the “Applicant“) was one of two local residents of Rugby who unsuccessfully challenged the Environment Agency’s decision to grant a permit allowing a local cement company to burn chipped tyres as fuel. Having failed at the Court of Appeal the Applicant appealed to the House of Lords but sought, unsuccessfully, to limit her costs.
The Aarhus Convention, along with the EIA and IPPC Directives (the “Directives“), states that review proceedings on certain environmental matters should not be “prohibitively expensive”. The applicant sought to challenge the costs order made against her by the (now) Supreme Court’s costs officers on this basis. The respondents disputed the jurisdiction of the costs officers to consider this issue. On appeal, the Supreme Court agreed that it should have sole jurisdiction to decide the issue. However, there was confusion over how European law preventing “prohibitively expensive” proceedings should be applied, prompting a referral to the ECJ.
Some of the questions referred were:
- How should a national court approach the question of costs in this context given the requirements of the Aarhus Convention and the two EU Directives cited?
- Should whether the cost of litigation is “prohibitively expensive” be decided on an objective or subjective basis?
- Is it relevant that the claimant has not been deterred from bringing proceedings?
On the first of these points, the ECJ held that any assessment “should secure the objective of ensuring effective judicial protection without excessive cost in the field of environmental law.” To that end, a national court should consider any relevant national law, including legal aid schemes and should satisfy itself that this aim has been achieved.
In terms of the basis of this assessment, the ECJ stated that this should be both subjective and objective. It would be subjective, in that a court would have to consider the actual circumstances of the applicant in front of it, rather than basing its assessment on the financial capacity of an “average applicant”. However, the basis could not be solely “the financial situation of the person concerned but must also be based on an objective analysis of the amount of the costs”. The ECJ stated that this was particularly crucial given the vital role played by individuals and associations in “defending the environment”. The ECJ identified a number of other relevant objective factors, including: the situation of the parties; the prospect of success; the importance of the case for both the applicant and the environment; the complexity of the law; and the potentially frivolous nature of the claim.
Finally, the court held that a claimant could not be penalised for persisting in bringing a claim despite failing to limit their costs (e.g. through a protective costs order). This, it held, was not enough, by itself, to show that the proceedings are not prohibitively expensive for the purpose of the Directives. It emphasised that any other approach would be unlikely to comply with the EU legislature’s aims of ensuring access to justice and improving environmental protection. This marked an interesting a departure from both the Attorney General’s opinion and the ordinary meaning of “prohibitively” but was in keeping with the purposive approach advocated earlier in the judgment.
It is still unclear exactly what the costs in this case will be for the Applicant. The ECJ has clarified how to determine whether costs are “prohibitively expensive” but it has made it clear that the application of the test falls to national courts. Therefore, it will be for the Supreme Court to determine the extent of the Applicant’s liability for the costs incurred. Ms Pallikaropoulos is quoted as saying: “I hope this means I won’t have to pay the exorbitant costs claimed by the government simply for standing up for the environment in Rugby.” Whilst she may not yet be home and dry, the ECJ has certainly smoothed the way for her.