Protective Costs Orders: A reminder…
The Aarhus Convention and a European Directive produced in 2003 (“the Directive”) safeguards the public’s right to challenge planning decisions affecting environmental issues (including the grant of planning permissions) by requiring that access to justice should not be “prohibitively expensive”. Protective Costs Orders (“PCOs”) have become one of the main ways in which the UK has attempted to meet this objective.
PCOs limit a claimant’s liability to pay the other side’s costs even if their challenge is unsuccessful. For example, a claimant’s cost liability would be capped at £5,000 for an individual or £10,000 if the claimant was a company. A claimant that is successful in quashing the planning permission could, however, recover up to £35,000 from the unsuccessful local planning authority (“LPA”).
It is accepted that these measures protect a legitimate claimant’s access to justice and ability to hold LPAs to account for unlawful or irrational decision making; irrespective of their financial means.
On the other hand, it may be difficult to shake the cynical view that the PCO regime has created a new breed of objector, i.e. those who are now prepared to use judicial review as a tool to defeat planning permissions without the usual cost risks of litigation.
It is perhaps, for this reason, we have seen an unprecedented rise in challenges over recent years, with some objectors not stopping in the High Court, but pursuing their claim through the appeal courts and even the Supreme Court safe in the knowledge that their costs liability is capped at each stage. Even if the planning permission is ultimately upheld, the delay of litigation in itself may stifle new developments - particularly in an uncertain market where values are volatile.
The New Rules
There are numerous knee-jerk reactions concerning the new PCO rules. Many commentators - including local interest and environmental groups - consider that the new rules will prevent a claimant’s access to justice and fall foul of the Directive by making claims costs prohibitive. I do not immediately share these concerns.
To summarise the new rules, from 28 February 2017, judicial review claimant’s may only secure a PCO if:
By following the above tests and reviewing a schedule of the claimant’s financial resources now required to be submitted at the outset of proceedings, the Court may decide whether a PCO should be granted to a Claimant. This was not previously required. Further, the “otherwise unreasonable tests at paragraph 2 above only apply if the claimant cannot prove lack of means and may still obtain a PCO if these tests are met. If the Court decides to award a PCO, it may also decide whether the existing £5,000 / £10,000 liability caps - or the £35,000 reciprocal costs cap that may be recovered by the claimant from the defendant LPA - should be increased.
The new rules are being challenged by ClientEarth, Friends of the Earth and the RSPB and a decision should be forthcoming in the coming months. In the meantime, or until such time as the new rules are overturned, they will apply to judicial review claims commenced from 28 February 2017.
The End of Judicial Review Challenges?
Even if the new rules are upheld, I doubt it. Whilst I do consider the introduction of means testing is a step in the right direction to a fairer and more balanced system (as those with sufficient means should not benefit from liability capping), much will depend on how bullishly the Courts apply the new rules; the level of evidence required from claimants to prove lack of financial resource; or if the Court is prepared to interrogate such evidence when considering whether to award a PCO.
Somewhat cynically, we may also see an increase in individual claimants fronting challenges in attempt to more easily prove lack of means to secure a PCO. At the end of the day, the new rules will still - in the same way as the previous rules - allow PCOs to be secured by those who really need them.
Objectors are also becoming wiser in terms of how planning permissions may be challenged. Courts are least likely to interfere in the merits of the development, which is why objectors are continuing to scrutinise the application process and committee reports more than ever.
Common grounds of challenge include the lack of proper application of the section 38 (6) balancing exercise; misinterpretation or application of planning policies; publication or notification defects; and/or failure to properly screen for Environmental Impact Assessment or undertake Appropriate Assessment. Indeed the upcoming changes to the Environmental Impact Assessment regulations in May this year will provide another battleground for objectors and ammunition to seek to challenge new consents. A summary of the changes may be found at here.
The largest frustration on behalf of many developers (and us when instructed to defend judicial review proceedings) is that many of the errors alleged could have been easily resolved through the LPAs decision making process. For example, the issue of a robust screening opinion immediately prior to the issue of planning permission could easily address challenges on EIA grounds, and an additional sentence or two in a committee report could sufficiently address criticisms concerning policy interpretation or allegations that the LPA failed to discharge its duty to assess the application against the development plan as a whole.
It, therefore, continues to be important for developers and LPAs to work together to ensure their planning applications and decision making is robust to minimise the risk of significant cost and delay of judicial review. There are many practical ways that this may be achieved and it is, therefore, important for advice to be obtained at the earliest opportunity.