- Protective costs orders (PCOs) are orders at the outset of a case that a successful defendant will be unable to recover costs either at all or above a small cap from the claimant in a judicial review claim. The current PCO regime has been found to be in breach of the UK's obligations under the Aarhus Convention (Convention) to ensure access to justice in environmental cases at costs which are not prohibitively expensive.
The reforms will codify the PCO regime and set specific caps on the maximum cost that the court can order a party to pay. The new Civil Procedure Rules (CPR) which come into force from 1 April 2013 provide that in cases within the ambit of the Convention:
- the liability of a claimant in relation to the defendant's costs is capped at £5,000 (for an individual) or £10,000 (for an organisation);
- the liability of a defendant in relation to the claimant's costs is capped at £35,000;
- costs protection will apply from the point at which the claim is issued; and
- there is no mechanism for challenging the level of the capped limits.
- The greater costs certainty provided to claimants by these changes is likely to encourage more judicial review claims to be brought on grounds falling within the scope of the Convention. This may impact on a wide range of construction, infrastructure and energy projects, among others.
The Convention is an international agreement which aims to protect the environment by promoting the accountability of governments in their interactions with the public. Both the UK and the EU are parties to the Convention.
The Convention is made up of three pillars: (1) the right to access environmental information held by public authorities; (2) the right to participate in environmental decision making; and (3) the right to challenge breaches of the first two pillars.
Article 9(4) of the Convention states that as part of the access to justice requirement, review procedures to allow the public to challenge (1) refusals to provide environmental information; (2) the legality of decisions, acts or omissions subject to the public participation rights; and (3) acts or omissions which breach national environmental laws, must be "fair, equitable, timely and not prohibitively expensive".
The Convention has a wide ambit. The environmental information which can be accessed under the first pillar includes information on the state of the environment (e.g. the air, water, soil), factors and measures which affect or are likely to affect the environment (e.g. noise, radiation or relevant agreements and plans) and the state and conditions of human life and infrastructure insofar as they are affected by the environment. The second pillar applies to decisions to permit activities as listed in Annex I, which includes power stations, waste management, road building and a variety of industrial plants, with a catch all provision for other activities which may have a significant effect on the environment.
Protective Costs Orders and the Corner House criteria
The ordinary costs rule under the CPR is that the unsuccessful party will pay the costs of the successful party, although the court may vary this at its discretion (CPR 44.3).
PCOs are orders generally made at an early stage of judicial review proceedings which state that an unsuccessful claimant will either not be required to pay the costs of the defendant, or will only have to pay up to a maximum amount. PCOs therefore provide some costs certainty to claimants who might otherwise be deterred from bringing a judicial review claim.
In the case of R (Corner House Research) v Secretary of State for Trade and Industry  EWCA Civ 192, the court set out the circumstances in which a PCO may be made:
A PCO may be made at any stage of the proceedings, on such conditions as the court thinks fit, provided that the court is satisfied that:
- the issues raised are of general public importance;
- the public interest requires that those issues should be resolved;
- the claimant has no private interest in the outcome of the case;
- having regard to the financial resources of the claimant and the defendant(s) and to the amount of costs that are likely to be involved it is fair and just to make the order;
- if the order is not made the claimant will probably discontinue the proceedings and will be acting reasonably in so doing.
- If those acting for the claimant are doing so pro bono, this will be likely to enhance the merits of the application for a PCO.
- It is for the court, in its discretion, to decide whether it is fair and just to make the order in the light of the considerations set out above.
The court also stated in Corner House that a PCO will only be granted in the most exceptional of circumstances. While subsequent authorities seem to indicate that the court is more likely to grant a PCO in judicial review claims falling within the Convention, the case law on this point does not set out any definitive principles. Under the Corner House rules, the granting of PCOs, the conditions attached to them and the level of the costs cap is entirely at the discretion of the court.
The impetus for reform
In its 2010 Decision in the Port of Tyne Complaint (ACCC/C/2008/33), the Aarhus Convention Compliance Committee (the Committee) found that the UK was in breach of its obligations under Article 9(4) with respect to the judicial review costs rules in England and Wales. The claimants wished to challenge a government licence which enabled the Port of Tyne to dispose of contaminated dredgings offshore, but complained that they had been prevented from doing so by the costs system. In upholding the complaint, the Committee concluded that the discretion of the courts in determining costs had led to significant uncertainty. The Committee also found that the current system did not give the public interest of environmental claims in and of itself sufficient consideration.
Secondly, the Corner House criteria have been found to be problematic both by the domestic courts and in extra-judicial reports (e.g. the Report of the Working Group on Access to Environmental Justice (2008) and the Liberty Report, Litigating in the Public Interest (2006)). Critics have noted the expensive satellite litigation which can arise out of PCO applications, and have argued that the public interest test is inappropriate given that the existence of a private interest is not mutually exclusive of a broader public interest.
The new costs rules for Convention claims
In October 2011, the Ministry of Justice opened a consultation into a costs capping scheme for cases falling within the Convention. The Government response was published in August 2012. As a result of the consultation, the Civil Procedure (Amendment) Rules 2013 (SI 2013/262) were made on 31 January 2013. The rules are due to come into force on the 1 April 2013, and provide for new CPR 45.41 – 45.44.
Under the new rules, claimants in cases that fall within the Convention will automatically have their liability for the defendant's costs capped at £5,000 if they are an individual and £10,000 if they are an organisation. The defendant will have its liability to pay the claimant's costs capped at £35,000. In order to minimise uncertainty, costs protection will apply from the time that the claim is issued. A defendant may challenge whether the claim falls within the Convention, but there is no mechanism for challenging the level of the costs caps in a Convention claim.
By codifying PCOs in environmental judicial review cases, the reforms introduce some clarity into a hitherto uncertain area of law. Since the rules are aimed at ensuring court procedures are accessible in Convention cases it is likely that there will be more environmental judicial reviews, although the claimant must still bear the risk relating to its own costs.
Since certain statutory procedures may also be considered to be prohibitively expensive within the meaning of Article 9(4), it is possible that the Government will take further measures to ensure Convention compliance. However, insofar as these reforms may be of concern, the Government is also considering, more generally, ways to stem the number of judicial review applications. Among the proposals put forward in the consultation which closed in January 2013 was a reduction in the time limit for bringing a planning judicial review to six weeks. The Government also recently announced its intention to develop further measures to streamline the process of judicial review in planning cases in the 2013 Budget. It remains to be seen, however, what changes the Government will make to reduce the burden of judicial review challenges from the perspective of those undertaking projects or other development.