High Court comments on Government amendments to costs-capping regime in environmental disputes

In R (on the application of Royal Society for the Protection of Birds and Others) v Secretary of State and others [2017] EWHC 2309 (Admin) NGOs challenged recent Government amendments to the costs-capping regime for environmental disputes. The High Court considered whether allowing the variation of costs caps in environmental disputes would deter meritorious claims and restrict access to justice.

Key points

• Decisions regarding the variation of costs caps in environmental disputes should be made at an early stage so as to provide reasonable predictability and avoid deterring meritorious claims. Costs caps should not subsequently be varied without good reason.
• Hearings concerning the variation of costs caps should be held in private in the first instance.

Background

As a signatory to the Aarhus Convention 2001, the UK has an obligation to ensure that environmental cases are not "prohibitively expensive" so as to allow access to justice. Between April 2013 and February 2017, automatic costs caps applied to judicial reviews which engaged the Aarhus Convention. The liability of individuals who brought unsuccessful claims was capped at £5,000, while the liability of companies or organisations was capped at £10,000. The liability of defendants was capped at £35,000. There was no scope for amendment of these costs caps. The application of mandatory costs caps provided certainty for the parties.

Following a detailed consultation process, the Government introduced a number of amendments to the Civil Procedure Rules ("CPRs"), including granting the court the discretion to vary these costs caps, provided it is satisfied that doing so would not cause the proceedings to become "prohibitively expensive."

The claimant NGOs sought to challenge these amendments on the grounds that:

1. The lack of certainty for claimants in relation to their potential costs liabilities would have a significant deterrent effect on meritorious claims and may therefore restrict access to justice;
2. Where the financial details of a claimant or third party supporter will be examined at a hearing, it is unlawful for the amendments to the CPRs to fail to provide for such hearings to take place in private, as the provision of confidential financial information into the public domain may deter claimants from bringing meritorious claims; and
3. A claimant's own costs should be taken into account when assessing whether a costs cap should be varied. This point was not contested by the defendants.

Decision

The claimants were partially successful in challenging these amendments.

The Court held that, to comply with the requirement that costs are not "prohibitively expensive," claimants should be entitled to reasonable predictability as to their liability for costs and the amounts for which they may be liable. A failure to provide reasonable predictability may deter claimants from bringing meritorious claims, particularly if the costs liability of unsuccessful claimants can be varied at any stage of the proceedings.

The Court noted that it would have been beneficial for the CPRs to specify that an application for the variation of a costs cap should be raised on filing an acknowledgement of service, i.e. at the earliest possible stage. This was not explicit in the CPR. However, reading the rules as a whole, the Court was satisfied that it was sufficiently clear that any dispute regarding costs caps should be raised on acknowledging service and that a decision on this point should be made at an early stage, ordinarily the permission stage. The Court further commented that costs caps should not be varied later in the proceedings unless there was a good reason for doing so, for instance due to a change in the claimant's financial circumstances or in cases where the claimant's costs liability had been assessed based on false or fraudulent financial information. It would not be appropriate for a costs cap to be varied late in the proceedings simply because the defendant had failed to engage at an earlier stage.

The Court also held that hearings relating to the variation of costs caps should be held in private in the first instance. Hearings in relation to costs caps would entail discussion of financial information which would otherwise be considered confidential. The Court highlighted that individuals, organisations and third party supporters would be reluctant to put confidential information into the public domain. Requiring parties to do so would most likely have a chilling effect on meritorious claims. This would, in turn, constitute a breach of the requirements to ensure wide access to justice. Significantly, the Court also noted the lack of guidance in the CPRs as to what "financial information" must be disclosed. While acknowledging that this was not strictly before the Court in the current proceedings, it did recommend that the inclusion of a specific definition of "financial information" in the CPRs would be beneficial.

Comment

This decision tempers the uncertainty which has arisen following the amendment of the rules in relation to costs caps in environmental challenges. The Court has sought to re-emphasise the need to protect access to justice and ensure claimants are not deterred from bringing claims by the possibility of substantial costs liabilities, particularly those arising at a late stage in the proceedings. However, the Court retains its discretion to vary the costs caps in relation to Aarhus Convention claims. It remains to be seen whether this will have the effect of deterring claimants or third parties from commencing a challenge.

It is worth noting that in July 2017, Lord Justice Jackson recommended the extension of the Aarhus rules on costs caps to all judicial review claims as a means of increasing access to justice. In his report, Lord Justice Jackson considered that an application to vary costs caps should be raised on the point of acknowledging service and should be dealt with at the permission stage. This judgment therefore appears to be in line with Lord Justice Jackson's recommendations.

Andrew Lidbetter Partner +44 20 7466 2066 Email	Nusrat Zar Partner +44 20 7466 2465 Email	Jasveer Randhawa Of Counsel +44 20 7466 2998 Email