Breaking the Limits: New Rules Bring Changes to Cost-Capping in Judicial Review

This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

Summary and implications

For the past few years parties involved in judicial review claims involving environmental matters have benefited from fixed cost-caps that have brought certainty to people wishing to bring a genuine claim. However, the Civil Procedure (Amendment) Rules 2017 (the "2017 Rules”) that came into force on 28 February 2017 provide powers to the courts to vary or remove these limits.

The 2017 Rules set out detailed provisions which give the courts the power to vary or remove the current caps that seek to limit costs in legal challenges that relate to the protection of the environment (known as "Aarhus Convention claims").

In a planning context, Aarhus Convention claims include any claims with an environmental element such as those relating to environmental impact assessments.

Below we consider the changes that have been brought about by the new rules and the implications this may have on claimants wishing to challenge decisions based on environmental grounds.

What was the position prior to the 2017 Rules?

It is a well-established principle in litigation that the loser pays the winner’s legal fees. However, since 2013 there has been a particular costs regime in the UK that applies to eligible environmental cases by virtue of the UK’s membership of the Aarhus Convention. The Aarhus Convention requires that environmental legal challenges are not ‘prohibitively expensive’. The UK introduced rules in 2013 stating that, in accordance with this requirement, any claimant issuing a judicial review claim concerning an environmental matter will benefit from a cost cap of £5,000 if they are an individual and £10,000 for other types of claimants. This meant that if a claimant lost their case they would only be liable to pay the defendant's fees up to £5,000 or £10,000 respectively. There was also a reciprocal cost cap of £35,000 for defendants.

However, in September 2015 the government consulted on the matter of "Costs Protection in Environmental Claims" with a view to revising the costs capping scheme in place for environmental challenges. The government's response to this consultation was published in November 2016 and indicated that there would be changes to the costs protection regime in environmental cases which were to include a new 'hybrid' costs capping regime. The government proposed a move away from the fixed costs cap model to allow both upwards and downwards variation which would allow the courts to take into account the means of the particular claimant and interpret what 'prohibitively expensive' means in each individual case.

Cost-capping under the 2017 Rules

The government’s proposals in relation to cost-capping in environmental claims were realised in the 2017 Rules and apply to all eligible claims commenced on or after 28 February 2017. While the new provisions maintain the old cost caps for eligible claims, the courts will now have the power to vary these limits or remove them altogether. To do so, the court must be satisfied, having looked at the financial resources of the claimant, that this would not make the costs of the proceedings prohibitively expensive for the claimant. Furthermore, in the case of a variation that would reduce a claimant's maximum costs liability or increase that of a defendant, the court must be satisfied that without the variation the costs of the proceedings would be prohibitively expensive for the claimant.

So that the court can assess the level of cost protection to be granted, the claimant will be required to file with the claim form a schedule of their financial resources which must take into account any financial support which any person has provided or is likely to provide to the claimant and which is verified by a statement of truth. There does not appear to be any corresponding provision for defendants or interested parties to provide details of their financial resources, despite the court having the power to vary the costs liability of any party.

There are also changes in respect of defendants who challenge whether a claim is in fact an Aarhus Convention claim. Where a defendant launches such a challenge and it is unsuccessful, it will only be expected to pay the claimant’s costs on a standard basis (rather than on an indemnity basis as was previously the case). Where the claimant is unsuccessful in defending such a challenge no order for costs will be made.

Impact

There are concerns that people with a genuine claim will be discouraged from pursuing their case as the claimant will not know until after they have issued their claim what their potential cost exposure will be. The changes may also affect environmental claims which are crowd funded as the new provisions specifically state that the court will have regard to any financial support provided to the claimant, as outlined above.

However, a Ministry of Justice spokesman has said “The cost of bringing environmental challenges must not be prohibitively expensive and our changes will ensure that individuals are not expected to pay legal costs above their means. Legal aid remains available for these cases".

It remains to be seen how the courts will interpret their new powers and whether the number of legal challenges relating to environmental matters will reduce as a result.

If you have any queries about planning and environmental claims, costs, or how the new legislation may affect you, please do not hesitate to contact us.