Overprotective Expenses Orders?

The Reclaiming Motion of J Mark Gibson, Petitioner and Reclaimer, for judicial review of a decision of the Scottish Ministers, Energy and Climate Change Directorate, dated 23 July 2014 [2016] CSIH 10

The Inner House has recently considered the test for awarding Protective Expenses Orders, the mechanism by which petitioners can seek to limit their liability for legal costs in environmental appeals and judicial reviews.

Background

The petitioner raised judicial review proceedings against a decision of the Scottish Ministers not to hold a public enquiry, and to grant consent to Scottish Power Renewables (UK) Limited for the construction of a wind farm around 4km from his property.

In 2015, the petitioner sought a protective expenses order (PEO), requesting that his liability in expenses to the Scottish Ministers (the respondents) and Scottish Power Renewables (UK) Limited (the interested party) be restricted to a cumulative total of £5,000. The petitioner also sought to limit the liability of the respondents and the interested party to £30,000.

The court refused the petitioner’s request for the PEO. The petitioner appealed to the Inner House of the Court of Session.

The Decision

In deciding whether to grant a PEO, the court must take into account “the need to ensure that it is not prohibitively expensive… to continue with the proceedingsthe question of whether the petitioner was able to meet the expensesnot the petitioner’s ability to pay, but whether it is reasonable, in all the circumstances, that he should be required to do so.” The Inner House discussed the appropriate test when considering this element. The Inner House felt that the Lord Ordinary had erred in addressing “”. In their view, the test is “.”

The Inner House allowed the appeal and awarded the PEO.

In reaching their decision, the Inner House considered the petitioner’s application by applying a subjective and objective test. The court acknowledged the focus of the underlying European law was the protection of the environment “and the removal of unreasonable financial barriers which may act as a disincentive to members of the public…from playing an active role in protecting and improving the quality of the environment.”

The Subjective test

The Inner House explained that although the petitioner could be seen to be a “wealthy manby many standardsto destroy the very thing” “” it did not follow that it was reasonable for him to be required to meet the costs of the case. Requiring the petitioner to sell off parts of his estate would be “” he was seeking to preserve. Similarly, they did not consider it reasonable for the petitioner to withdraw funds from his pension fund to pay for the proceedings.

The Objective test

The court specifically referred to the objective test, as discussed in the Supreme Court decision of R (Edwards and another) v Environment Agency and another (No 2):

“The cost of proceedings must not exceed the financial resources of the person concerned nor “appear to be objectively unreasonable”, at least “in certain cases””.

In assessing what is “objectively unreasonableEdwards” the court in explained that:

• It is not possible to solely rely on the resources of an “average applicant” when determining what is objectively unreasonable; this may have little bearing on the situation of the actual applicant.
• The “merits” of the case may be taken into account when determining whether it is objectively unreasonable for the applicant to pay i.e. “whether the claimant has a reasonable prospect of success, the importance of what is at stake for the claimant and for the protection of the environment, the complexity of the relevant law and procedure, the potentially frivolous nature of the claim at its various stages”.
• The fact that the claimant has not been deterred from “carrying on the proceedings is not “in itself” determinative” that is reasonable for them to pay.

In this case, the court highlighted that no party had suggested that the claim was frivolous, or that the petitioner had no reasonable prospects of success. Accordingly, in applying the objective test, the court looked to:

1. The importance of what is at stake for the claimant – the petitioner argued that a PEO should be awarded because he had no financial interest in the outcome of the case. He was raising the action solely to protect the environment. The court agreed and felt that the wind farm development and/or the proceedings were unlikely significantly to affect the petitioner’s economic interests.
2. The importance of what is at stake for the protection of the environment – The court referred to an observation of Advocate General Kokott that “the environment cannot defend itself, but needs to be represented by concerned citizens or organisations acting in the public interest.” The Inner House felt that the petitioner was a “concerned citizen”.

What does this mean for future PEOs?

In light of this decision we may see an increase in the number of PEO applications. Not only because of the extent to which the Inner House has emphasised the importance of the broad aim of the European directive on environmental protection but also because of the comments made about the length of time applications should take and the extent to which the petitioner’s finances should be subjected to analysis.

The court expressed concerns as to the length of time that the PEO application had taken and hoped that future applications would be dealt with much more quickly. In particular, they highlighted that PEO applications were not an “opportunity for a respondent to subject an applicant to intrusive and detailed investigation of financial circumstances.” Accordingly, they expect that parties’ submissions should be capable of being concluded within a total of 1.5 hours and that courts will be able to give immediate ex tempore judgments.

It might be felt this will result in the courts adopting an overprotective approach or alternatively that it may just bring the approach of the Scottish courts more in line with the English courts which has often been considered to be more generous towards applicants.