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Access to justice: protective costs orders in planning challenges

July 2009 - Real Estate & Property. Legal Developments by CMS Group.

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Third parties and competing developers have no rights of appeal to the Secretary of State against planning decisions. Disappointed applicants can appeal to the Secretary of State and can have the merits of the application reconsidered. The only remedy available to a disappointed third party is a challenge by way of judicial review in the High Court on a point of law. The sense of frustration and disempowerment this creates has not been helped by the increasing complexity of the planning process and the use of consultation to legitimise decisions that many perceive may already have been taken.

Ironically, with each new clarification and extension of planning application procedures, ostensibly to encourage greater public access, the more the public are alienated. Similarly, the introduction of onerous consultation obligations on the promoters of major infrastructure projects under the Planning Act 2008 is likely to lead to consultation fatigue.

The response is often the formation of single-issue groups of disaffected citizens to take direct action (for example, sit-ins or criminal damage etc) or High Court challenges. This could be by judicial review of the local planning authority’s decision or a challenge to a planning decision by the Secretary of State under s288 of the Town and Country Planning Act 1990. Increasingly, challenges are also being brought against government decisions to adopt the policy on which subsequent decisions are based (for example, the challenge by residents’ action group BARD to the government’s eco-towns consultation). The cost of litigation does not have to be a deterrent for these third-party challenges. The court can make a protective costs order (PCO) using its general discretion, whichever procedure is used.

Promoters of development need to be aware of the circumstances in which a PCO might be made when assessing the likelihood of third-party challenge. The challenge will be to the decision of the local planning authority, Secretary of State or other public body, but it is the promoter who will suffer if the challenge is successful.

What is a PCO?

The normal position with any litigation in England and Wales is that an order for costs will not be made until litigation has been concluded. The losing party will usually be ordered to pay all or part of the winning party’s costs. This means claimants must be able to absorb the risk of a costs award against them should their challenge fail. This reflects the fact that the majority of disputes litigated before the courts are private disputes. PCOs recognise that in the arena of public law, costs can be a barrier to actions being brought to challenge public decisions. In this context, the public interest may require changes to the usual rules on costs to allow public interest groups or impecunious claimants to mount challenges to decisions where there is a public interest in the issue in question, and it would be unreasonable to expect an individual to bear the cost of the challenge.

A PCO can be sought to limit the claimant’s exposure to the other side’s costs, including the respondent decision maker and any interested third parties appearing, such as developers. PCOs allow the issue of costs to be settled before the costs of preparing submissions for a substantive hearing of a judicial review are incurred, and they allow the claimant to assess its likely exposure to costs before deciding whether or not to proceed with the challenge.

PCOs are granted at the court’s discretion and can take different forms, for example:

  • an order that the respondent cannot recover costs at all;
  • an order that the respondent can only recover costs up to a specified limit; or
  • an order that neither party can recover costs.

The usual corollary to an order limiting the claimant’s exposure to costs is a corresponding limit on the costs that the claimant can recover should its claim be successful.

When are PCOs available?

PCOs are available at the discretion of the court, taking into account the factors set out in the leading case on the topic, Corner House Research, R (On the application of) v Secretary of State for Trade & Industry [2005] (see box on p59 for key criteria). The court may be more willing to exercise its discretion to grant a PCO in planning cases involving environmental issues as a result of the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (known as the Aarhus Convention (the Convention)), which was ratified by the UK and the EU in 2005. The Convention’s aim was to improve access to justice in environmental matters. Article 9(4) of the Convention in particular requires that members of the public should have access to procedures that:

‚ÄėProvide adequate and effective remedies, including injunctive relief as appropriate, and be fair, equitable, timely and not prohibitively expensive.‚Äô

Where a judicial challenge engages with environmental matters, claimants can rely on their rights under the Convention to seek to convince the court that a PCO is justified. Arguments based on the Convention were deployed in Stop Stansted Expansion’s successful application for a PCO when it sought to challenge the Secretary of State’s decision to relax the planning conditions restricting the capacity of the existing runway at Stansted Airport.

PCOs in practice

Acting for the claimant

There are clear advantages for claimants in seeking a PCO. Claimants can get the application heard early, before any substantial fees are incurred by any parties (ie before the permission stage for a judicial review or before the hearing of a section 288 challenge). Once a decision on a PCO has been made, the claimant enjoys the certainty of knowing what its costs exposure will be, which allows it to make an informed decision on whether or not to proceed with the challenge and the implications if the challenge should fail. It is worth noting that in some cases, for example the Corner House decision, the PCO meant that the claimant would pay no costs, even if it lost the challenge.

PCOs can also be useful to claimants where other interested parties seek leave of the court to intervene in the judicial review proceedings (for example, intervention by government departments where particular policies are at issue). Claimants can seek an order to ensure that they do not have to bear the costs of third parties who choose to take part in the proceedings.

The main disadvantage to claimants of seeking a PCO is that the order may restrict the claimant’s ability to claim its own costs back from the respondent if the challenge is successful. This could be particularly problematic if the claimant’s legal representation is on a contingency fee arrangement (where a substantial success fee will often be payable), as the costs the claimant recovers from the respondent may not be adequate to meet the claimant’s legal bill.

Acting for the respondent and other parties

When acting for a respondent (usually local planning authorities or other public bodies) and other parties (often including the interested developer), the effect of a PCO is usually unwelcome, as it will restrict the ability of the respondent to recover the expenditure incurred in defending its decision where the claimant is unsuccessful.

By Tony Kitson, partner and head of planning, and Kate Johnson, solicitor, CMS Cameron McKenna LLP. E-mail: tony.kitson@cms-cmck.com; kate.johnson@cms-cmck.com.

Factors the court will consider on application for a PCO
  • The judicial review or statutory challenge must have a real (not just fanciful) prospect of success;
  • there must be a public interest in making the PCO;
  • the issues raised must be of general public importance;
  • the public interest must be in resolving those issues;
  • the applicant must have no private interest in the outcome of the case;
  • it must be fair and just to make the order having regard to the financial resources of the applicant and the respondent and the costs likely to be involved; and
  • if the order is not made, the applicant will probably discontinue the proceedings and will be acting reasonably to do so.