R (on the application of Edwards and another) v Environment Agency and others (No 2)

In environmental proceedings governed by the Aarhus costs requirement, costs must neither exceed the claimant’s financial resources nor be objectively unreasonable. The assessment therefore combines subjective and objective considerations.

The court may consider the claimant’s prospects of success, the importance of the interests at stake, environmental protection, complexity and potential frivolity. The same principles apply at every appellate stage, but the appropriate protection may differ with the context and costs already incurred. Continuing proceedings despite the risk of costs does not itself establish affordability. A prospective standard costs cap does not determine a retrospective assessment under materially different circumstances.

Judicial review proceedings challenged an Environment Agency permit allowing a cement works to use shredded tyres as fuel. The claim failed in the High Court, the Court of Appeal and the House of Lords. Mrs Pallikaropoulos, who had joined as an appellant in the Court of Appeal, became liable for the respondents’ costs of the final appeal.

Following its earlier judgment, [2010] UKSC 57, the Supreme Court referred questions to the Court of Justice concerning the requirement that environmental proceedings should not be prohibitively expensive. After receiving the Court of Justice’s answer in Case C-260/11, the Supreme Court had to determine whether the respondents could recover £25,000, representing the security already lodged by the appellant.

1. The respondents were awarded £25,000 jointly. Lord Carnwath, with whom Lord Neuberger, Lord Hope, Lord Mance and Lord Clarke agreed, held that this sum was neither subjectively nor objectively excessive. The amount represented a substantial reduction from the respondents’ combined bills and was not unreasonable when considered with the £2,000 awarded in the Court of Appeal.

2. The requirement in article 9.4 of the Aarhus Convention is not assessed by a purely subjective inquiry. Costs must not exceed the financial resources of the person concerned and must not appear objectively unreasonable. Exclusive reliance on the resources of an average claimant is also inappropriate. The court must balance the individual’s interest in defending legal rights with the public interest in environmental protection.

3. The court may take account of the claimant’s reasonable prospects of success, the importance of what is at stake for the claimant and for environmental protection, the complexity of the law and procedure, and whether the claim is potentially frivolous. A substantial personal economic interest may justify a greater costs risk. Conversely, significant environmental interests may justify reducing or eliminating recovery because environmental protection commonly depends upon citizens and organisations acting in the public interest.

4. The same principles apply at first instance and on each appeal, but they need not produce the same order at every stage or a single global cap. Each court should consider the proceedings in their current context and take account of costs already incurred. The public interest, prospects of success and other relevant considerations may change as litigation progresses.

5. The fact that a claimant continued despite exposure to costs does not itself establish that the proceedings were affordable. In this case, however, the limited evidence did not show that payment of the £25,000 already lodged would exceed the appellant’s means or cause hardship.

6. The £5,000 cap introduced for later environmental judicial review claims did not bind the court’s retrospective assessment. Prospective caps serve certainty and avoid satellite litigation. An assessment after judgment permits closer examination of the merits, actual costs and consequences for the parties. Here the case was complex, the respondents’ costs were not excessive, the environmental benefit of the final appeal was limited, and the prospects of obtaining final relief were highly questionable.

1. United Kingdom Supreme Court: Following its earlier reference judgment, [2010] UKSC 57, the court applied the Court of Justice’s guidance and awarded the respondents £25,000 jointly.

2. Court of Justice of the European Union: In Case C-260/11, the court answered the Supreme Court’s questions concerning the meaning of “not prohibitively expensive”.

3. House of Lords: The substantive appeal was dismissed by [2008] UKHL 22. A costs order was made against Mrs Pallikaropoulos.

4. Court of Appeal: The appeal was dismissed by [2006] EWCA Civ 877. Mrs Pallikaropoulos’s liability for that stage was capped at £2,000.

5. High Court: The substantive judicial review claim was dismissed by [2005] EWHC 657 (Admin). The court found procedural unfairness but refused relief in its discretion.