Costs News

21 September 2017
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Partial victory in judicial review of government cost rules on environmental claims

Three pressure groups have claimed a partial victory in their High Court battle against the new costs regime for cases involving the environment.

Mr Justice Dove ruled that the Ministry of Justice must change its rules to ensure that any hearing about costs protection limits takes place in private.

However, he did not strike down provision in the Civil Procedure (Amendment) Rules 2017/95, which allowed for default caps on legal costs to be varied at any point during the case, rather than remaining fixed throughout.

Under the environmental costs protection regime introduced in 2013, costs for unsuccessful claimants were capped at £5,000 for individuals and £10,000 for organisations. Defendants’ liability for claimants’ costs were similarly capped, at £35,000.

But the new rules, introduced on 28 February, allow judges to vary the cost cap in a case (described in the ruling as the Aarhus costs rules or ACR). The judicial review brought by the Royal Society for the Protection of Birds, Friends of the Earth and ClientEarth argued that this weakened financial protection for claimants who faced unspecified costs, contrary to the Aarhus Convention on access to justice in environmental matters, which says costs rules must not make it “prohibitively expensive” to bring a case.

ClientEarth claimed they would make it “virtually impossible” to bring an environmental case in the public interest.

Dove J said it would have been “beneficial” for CPR 45.45 to specify that any application to vary the default costs caps should be included within the acknowledgement of service.

But he continued: “Nevertheless, as a matter of practice reading the ACR as a whole, if a defendant proposes to contend that the default costs caps should be varied they need to do so (and, as a matter of proper procedure bearing in mind the overriding objective, must do so) in their acknowledgement of service… I am satisfied… that there would be a decision on cost capping at an appropriately early stage of the proceedings.”

Dove J said there may be exceptions to this if either it emerged the claimant had provided false or misleading information in the schedule of financial resources, “or there has been a material change in the claimant's financial resources which justifies a re-examination of the question of whether or not the default costs caps” can be increased without the litigation becoming "prohibitively expensive".

He concluded: “I am satisfied that the provisions of the ACR in relation to varying the default costs caps is consistent with the applicable EU law when considered in the context of the surrounding procedural rules and practices.”

However, the judge ruled that the ACR needed to change so that, if a dispute in relation to the appropriate level of costs caps were to proceed to a hearing, it should be in private in the first instance. “I am satisfied that the chilling effect which the prospect of the public disclosure of the financial information of the claimant and/or his or her financial supporters would have on the propensity to bring meritorious environmental claims would be in breach of the requirements to ensure wide access to justice set out in the [European Court of Justice] jurisprudence.”

The third and final challenge to the ACR was over the inclusion of the claimant's own costs in the assessment of whether proceedings are "prohibitively expensive".

Dove J said: “The defendant accepts the validity of the claimant's position, namely that the claimant's costs may be a material matter for the court to consider in determining any application for a variation of the costs caps. In my view, that concession is properly made.”

In a statement, the three groups that brought the challenge said: “The verdict is an important victory in the battle for better access to justice in England and Wales. People who bravely stand up for nature by going to court can now do so in the knowledge that, once the costs are fixed, they will not be blindsided by a crippling legal bill they were not expecting and hadn’t budgeted for.

“Another victory from the hearing is that claimants will no longer have to reveal their private financial details in open court.”

Their solicitor, Rowan Smith of Leigh Day, added: “This is a hugely important judgment for anyone who cares about the environment. We have achieved major concessions to the government’s rules, which make it radically better for access to environmental justice and go a considerable way to allay legitimate concerns of a chilling effect on otherwise meritorious legal claims.

“Evidence before the court gave examples of successful legal challenges to protect birds, beavers and air quality, all which may not have been pursued under the new rules but for this landmark ruling.”

A Ministry of Justice spokesman said: “We are pleased that the High Court supports our approach to environmental costs protection, which ensures individuals are not expected to pay above their means.

“We will address the issue of private hearings and set out our position in due course.”

 

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