MoJ pushes on with environmental costs reform in face of strong opposition

Environmental claims: evening the playing field

Environmental claims: evening the playing field

The government is pressing ahead with reforms to costs in environmental proceedings, which it says will deter “unmeritorious claims”, despite opposition from those it consulted.

The aim of the reforms is to ensure “beyond doubt” that the regime complies with EU law – which requires that the costs of bringing certain challenges are not “prohibitively expensive”.

The majority of the 289 responses to the consultation paper, which was issued in September 2015, were against the plans.

The Ministry of Justice said that 207 of the responses were from individuals, half of which used a template response prepared by Friends of the Earth and disagreed with the proposals in the consultation, as did the majority of responses received from other individuals.

It also received 82 largely negative responses from businesses, campaign groups, professional bodies, public organisations, non-governmental organisations, academic institutions, parish councils, law firms and representative bodies.

Since 2013, the environmental costs protection regime (ECPR) has capped the costs that a court can order an unsuccessful claimant to pay to other parties: £5,000 for individuals and £10,000 for organisations. Defendants’ liability for claimants’ costs are similarly capped, at £35,000. All of these amounts are fixed – the rules do not allow for variation in individual cases

The changes the MoJ is introducing include:

  • Extending the ECPR to environmental reviews under statute engaging EU law, as well as judicial reviews;
  • Allowing a ‘hybrid’ regime so that, in appropriate cases, the financial caps can be varied;
  • Introducing more certainty that appropriate claimants will have grants of costs protection in appropriate cases in the Court of Appeal, and inviting the Supreme Court to amend its rules to do likewise;
  • Introducing “more of a level playing field” so that defendants are not unduly discouraged from challenging a claimant’s entitlement to costs protection; and
  • Clarifying certain issues, including that the ECPR can only be used by claimants who require costs protection because of EU law or the Aarhus Convention, the factors for a court to consider in ECPR cases when deciding whether to require a cross-undertaking in damages for an interim injunction, and that a separate costs cap applies to each claimant or defendant in cases with multiple parties.

The consultation response said: “The government believes that the changes will not prevent or discourage individuals or organisations from bringing meritorious challenges. By extending the ECPR to certain reviews under statute, the changes may encourage more challenges to public authorities.

“Other changes should, however, 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.

“Finally, by allowing the courts to vary the costs caps, based in part on claimants’ financial resources, the changes recognise that some claimants are financially better resourced than others.”

It said the current fixed-costs-cap model does not allow for costs caps to be varied to take account of what prohibitive expense means in an individual case.

“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 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.”

There were also concerns expressed that, when considering whether the costs of proceedings might be prohibitively expensive, the court should consider the claimant’s own costs as well as their potential liability to pay the defendant’s costs.

“The government does not agree with this view, not least because it has no control over the costs incurred by claimants which is a matter for 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.”

Under the proposals, a court would not be able to make a decision about varying a costs cap without information about the claimant’s financial resources, as is now the case in judicial review.

The uneven playing field for defendants, according to the MoJ, arises when defendants unsuccessfully challenge whether a case is an Aarhus Convention claim and the ECPR should apply at all, and normally face an indemnity costs order as a result.

“This provision was introduced because of concerns that defendants might be encouraged to bring weak challenges if there was no penalty for contesting a case and that, without some sanction, there could be unnecessary satellite litigation.

“The government is of the view that this has created an uneven playing field, and now considers it necessary to equalise the position. It proposes replacing the existing provision with one which would mean unsuccessful defendants could still expect to be ordered to pay costs, but normally on the lower, ‘standard’ basis.

“The government recognises that respondents are concerned that this proposal could lead to defendants bringing more challenges and could deter claimants from bringing claims. The government takes the view that an adverse costs award assessed on the standard basis would still provide an appropriate disincentive against unmeritorious challenges, and notes that the courts would still have the ability to choose to impose costs on an indemnity basis.

“A further factor is that almost all defendants are publicly funded bodies and they would need to be satisfied that they had sufficient grounds to justify spending public money on bringing a challenge.”

The MoJ said it would ask the Civil Procedure Rule Committee to make the rule changes as soon as possible, and then review them within two years of implementation.

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