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Costs cap in environmental cases may now be challenged in appropriate cases, says government


Caps on the costs that those challenging the environmental impact of public bodies' decisions in the courts in England and Wales can be ordered to pay may now be challenged in "appropriate" cases, the government has said.

The Ministry of Justice (MoJ) has stated that it will press ahead with the introduction of a 'hybrid' cost caps regime along with several other changes to the environmental costs protection rules it consulted on last year. These also include expanding the regime to cover a greater range of cases, although costs protection will not be introduced to challenges brought against companies and other private individuals, according to its response to that consultation.

The changes will be introduced by way of amendments to the civil procedure rules (CPRs) and practice directions, to be made by the CPR Committee "as soon as possible", the MoJ said. It also intends to review the impact and application of these changes, and to consider whether any others are needed, according to the response.

The government's decision to extend the costs protection regime to a broader range of cases, while introducing the possibility of challenge to the caps was "a true give and take", according to environmental law expert James Nierinck of Pinsent Masons, the law firm behind Out-Law.com.

"The government proposes to 'give' by expanding those claims which may benefit from costs protection," he said. "At the same time, it is 'taking' by allowing the prevailing fixed costs regime, which limited adverse costs orders to either £5,000 for individuals or £10,000 for organisations to be challenged."

"Overall, while increasing the scope of costs protection in terms of the types of cases in which challengers may benefit, the government's consultation can be seen to be a step-back from the high-water mark of fixed adverse costs protection without means assessment. While a broader range of cases will shortly benefit from costs protection, the inability of the courts to provide guaranteed minimum costs exposure will act as a deterrent to challengers looking to commence such cases," he said.

Introduced in its current form in 2013, the Environmental Costs Protection Regime (ECPR) is designed to ensure that it is not "prohibitively expensive" for campaigners and members of the public to challenge the decisions of public bodies. This is a requirement of the Aarhus Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention), to which both the UK and EU are signatories.

The EU's Public Participation Directive incorporates the Aarhus Convention requirements into EU law. In England and Wales, the requirements of the directive are implemented through court rules and associated practice directions. The current rules provide for a simple, fixed recoverable costs regime under which the amount recoverable from a losing challenger is capped at £5,000 for individuals and £10,000 in other cases. A 'cross-cap' also operates, limiting the costs recoverable from a public body subject to a successful challenge to £35,000.

In February 2014, the Court of Justice of the European Union (CJEU) held that the UK was within its rights to use court procedure or case law to give effect to the relevant parts of the directive. However, it was concerned that certain aspects of the regime in England and Wales did not "ensure the claimant reasonable predictability" about the ultimate cost of legal fees, including the ability of judges to impose a 'cross cap' on the amount that a successful challenger could claim back from the public body and the fact that the rules did not take into account an individual challenger's financial position.

The 'hybrid' regime will allow the courts to reduce the level of costs protection for financially well-resourced challengers. The court will require information about the challenger's financial resources in order to make a decision about varying a costs cap, something which is already required during the judicial review process for non-environmental cases. The regime will be extended from only judicial review to cover other statutory claims which engage EU law, such as certain claims under the Town and Country Planning Act and the Planning (Listed Buildings Conservation Areas) Act.

The proposals were rejected by many of the respondents to the MoJ's original consultation, some of whom argued that the changes could lead to additional hearings where the level of protective costs was challenged. However, the MoJ dismissed these objections, arguing that the changes would "deter unmeritorious claims which cause delay and frustrate proper decision making, without undermining the crucial role which judicial reviews and reviews under statute can have as a check on public authorities".

"The government recognises that respondents were concerned that the proposed model, whereby either party could seek to vary the level of a costs cap, would lead to additional hearings," it said in its response. "It considers, though, that the number of additional hearings would be minimised by the approach taken in the proposed rules and by the general principles governing who pays the costs of hearings."

The MoJ also rejected a suggestion that the court consider the challenger's own legal costs when considering whether the costs of proceedings might be prohibitively expensive, on the grounds that it "has no control over the costs incurred by claimants and their legal representatives".

"The government does accept, however, that claimants' liability to pay court fees should be taken into account by the courts when considering whether the costs of proceedings might be prohibitively expensive," it said.

Environmental law expert James Nierinck said that the MoJ's proposed changes would "increase claimant costs risks" and could potentially be used tactically by public bodies or interested parties involved in environmental challenges.

"The accompanying financial disclosure exercise will also increase claimant costs, and will act as an unwelcome and intrusive administrative hurdle," he said. "In practice, lay people do not want to disclose the value of their house, land, amount in their bank accounts and savings."

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