Access to justice is an expensive business. Judicial reviews and environmental appeals are increasingly in the public eye with significant challenges to planning developments or compulsory purchase order being taken regularly by individuals affected.
There are of course risks in any litigation and in the event that the individual taking the appeal or petitioning the court fails in their application they may find themselves liable for not only the expenses that they will have incurred to their respective solicitors, Counsel, experts etc but also for a portion of the costs incurred by the other side. This risk can mean that parties are reluctant or unable to take part in an application for judicial review or environmental appeal despite considering that any such application or appeal has prospects of success.
On 25 March 2013 the Rules of the Court of Session are due to be amended to insert a new chapter detailing the procedure to be followed in relation to protective expenses orders (PEO's) in environmental appeals and judicial reviews.
A PEO is an order which restricts liability for expenses in any proceedings (including future expenses) with the aim to avoid the taking of action being prohibitively expensive for an applicant or petitioner. That means that whilst a party to proceedings can and ought to make his own arrangements in relation to costs incurred by him, any potential liability to the other side in the event that the case is unsuccessful may be restricted.
Where the court is satisfied that the proceedings are prohibitively expensive for the applicant it must make a PEO. The court may refuse to make the order if it is satisfied:
- That the applicant has failed to demonstrate a sufficient interest in the subject matter of the proceedings; or
- That the proceedings have no real prospect of success.
This is a little strange. On the one hand if the court thinks that the cost will be too great for the applicant it must grant an order but on the other it can refuse on two basis. However, there would seem little point in granting an order for protective expenses in the event that the proceedings were doomed to failure. The new rule does confirm that proceedings are considered prohibitively expensive "if the applicant could not reasonably proceed with them in the absence of a protective expenses order."
The terms of a PEO must contain provision limiting the potential liability of the applicant to any respondent for their expenses (in the event that the application is unsuccessful) to £5,000. In the context of judicial review proceedings £5,000 is nowhere near what the actual expenses might be or the judicial expenses which might be recoverable as in the ordinary course of business. There is also provision, in the event that the applicant can persuade the court to do so, for that sum to be reduced. On the contrary the limitation which must be afforded to the respondent's potential liability for the expenses of the applicant is fixed at £30,000 although this sum can be raised.
A PEO may:
- Exclude any party's liability in expenses to any other party;
- Limit any party's liability in expenses to any other party;
- Provide that no party will be liable for the expenses of any other party;
- Include provision -
- As to a party's liability in expenses to any other party;
- As to a party's liability in expenses if the applicant is unsuccessful in the proceedings; or
- As to a party's liability in expenses regardless of the outcome of the proceedings.
What this seems to suggest is that a PEO may contain all sorts of orders and directions however the preceding obligations are to the effect that the monetary figures of £5,000 and £30,000 (or such other number as the court decides) must be included.
This is a sea change in the way that litigation is to be funded based on the need for access to justice. The prejudice to the local authorities who will generally be the respondents in such proceedings is quite considerable. However, a PEO is not to be granted until all of the parties are afforded the opportunity to be heard. It may well be that the merits of applications and petitions are explored at an early stage in proceedings once an application for a protective expenses order is made which could result in the disposal of any unmeritorious claims earlier, thereby limiting the expense to which a respondent is put.
It remains to be seen how PEO's will impact on the number of judicial reviews and environmental appeals raised however we anticipate an increase. How many proceed to first hearings depends on how the courts approach the hearing on any motion for a protective expenses order.