The issue of costs involved in any form of legal challenge relating to planning was raised in the recent expenses decision of Uprichard v Scottish Ministers & Fife Council [2011] CSIH 59. In that case Miss Uprichard was found liable for the entire expenses (£173,000) of a challenge to the Fife Structure Plan brought under section 238 of the Town and Country Planning (Scotland) Act 1997. The challenge itself was against the decision of the Scottish Ministers to identify strategic land allocations in St Andrews West for housing, a business park and a research centre.

Expenses on this scale raise the issue of whether or not parties bringing legal challenges should have some form of protection against prohibitive costs. Public bodies may naturally think that such protection should be limited, while aggrieved parties will no doubt think that there should be sufficient safeguards in place to ensure that litigation can be raised, without the threat of shouldering substantial costs, where it is in the public interest.

There are important lessons in Uprichard and other similar cases, both for public bodies, and for those seeking to challenge them, when it comes to costs. The fundamental question here is: what protections exist in relation to costs for a party seeking to raise a legal challenge?

Two forms of protection

When raising a legal challenge in connection with a planning matter, whether by judicial review or by statutory challenge, there are two possible forms of protection. The first is a protective costs order (PCO), and the second is the Aarhus Convention.

To take the Aarhus Convention first, this is a UN Convention that has been adopted by the member states of the EU. One of its aims is to grant rights in relation to access to environmental justice (planning matters are included within the ambit of “environmental”). Article 9(4) of the Convention provides that a party raising litigation in relation to an environmental matter should be spared the burden of “prohibitive costs”. This Article was relied upon in Uprichard as a justification to oppose the Council’s legal costs (Miss Uprichard had already conceded the Scottish Minister’s costs). However, the Court applied a form of “means” test to it, which required Miss Uprichard to disclose her income level and her capital worth. Her failure to disclose this information meant that her argument was unsuccessful. The Court also had no qualms about imposing this high test since it was entirely within Miss Uprichard’s control as to whether this information was provided. It is clear that to rely upon Article 9(4) an applicant will have to demonstrate that they are of limited means so that the Court can, as stated in Uprichard, “contemplate the exercise of our discretion in the spirit of the Aarhus Convention”.

The Uprichard case also made the point that a party challenging decisions before the Court does so in the full knowledge that if they fail they will be liable for the costs of the challenge. It is difficult to argue against this point although there is perhaps a greater issue here in relation to just how expensive such a legal challenge should be. It perhaps should be argued that access to the Courts should be available to all parties irrespective of means, and a party should not be priced out of raising a legitimate grievance in Court.

The alternative to relying solely on the wording of the Aarhus Convention, is to seek a PCO in connection with a legal challenge. A PCO is an order granted by the Court that places a limit on the level of fees a challenger will be expected to pay in the event that they lose whatever challenge they raise. The following are some general principles have been established in relation to PCOs:

  • A PCO can be obtained at any time during proceedings (although it would be wise to seek one as early as possible);
  • The applicant must demonstrate that the challenge is in the public interest;
  • The applicant must demonstrate that it is fair to grant the PCO given the resources of the applicant and the respondent public body;
  • If the PCO is not made, the applicant will discontinue the action; and
  • If a PCO is granted, a “cost cap” that restricts the level of costs that a person raising a challenge would be entitled to recover if the challenge is successful, should be imposed.

Costs liablity can still be prohibitive, even with a PCO

Although on first view an applicant would be forgiven for thinking that a PCO (albeit granted with a commensurate cost-cap) would entitle them to raise a legal challenge without fear of being subject to exorbitant costs if they lose, it should be borne in mind that the general principles have been strictly imposed by the Courts and have not led to a flurry of challenges being raised.

In the case of McGinty v Scottish Ministers [2011] CSOH 163, Mr McGinty was awarded a protective costs order in relation to challenging of the Scottish Ministers' decision to include Hunterston power station and transhipment hub as a national development in the National Planning Framework. Since Mr McGinty met the criteria set down in the general principles mentioned above, the Court granted him a PCO. However, the PCO stated that his costs liability would still be £30,000. Mr McGinty had disclosed his financial circumstances to the Court, it was accepted that he was unemployed, on job-seekers’ allowance of £128.60 per week, and that he had savings of around £1000. It was also accepted that if the PCO was not awarded that he would discontinue the challenge. However, the Court still exposed Mr McGinty to what could reasonably considered to be prohibitive costs in the event that he lost.

No PCO without full financial disclosure

The facts in Uprichard are slightly different. Miss Uprichard was looking to rely upon the terms of the Aarhus Convention rather than secure a PCO, and she sought to restrict her exposure to costs after she had lost her legal challenge. The fact that she did not seek a PCO at any stage in the proceedings did to some extent influence the Court’s decision. The decision states that it would have been open to Miss Uprichard to seek a PCO at any stage although any such application would have required full financial disclosure. There were a further two obiter remarks (comments that do not form a substantial part of the decision) of interest in Uprichard. The first was that it is advisable to apply for a PCO as early as possible in the legal process, although a failure to do so does not prevent the Court from considering an application at a later date. The second point, which is crucial in considering any form of costs protection under either Aarhus or in respect of a PCO, is that it is a relevant consideration for the Court when dealing with expenses at the end of the judicial process, that the likelihood of being burdened with the costs of the action, did not stop the applicant from pursuing an appeal. In other words, the applicant did not withdraw legal challenge when it became apparent that the expenses could be awarded against them.

Uprichard and McGinty are both cautionary tales, indicating that it is difficult for an applicant to obtain some form of protection from prohibitive costs. Miss Uprichard was arguably the architect of her own downfall given her failure to fully disclose her financial circumstances to the Court. More sympathy is perhaps given to Mr McGinty who succeeded in obtaining a PCO only for his exposure to costs to remain prohibitively high.

Practical considerations

If you are planning to raise (or defend) a legal challenge, what action should you take in relation to costs? The practical advice would be to seek a PCO as early in the process as possible. However, a person looking to secure a PCO should be prepared to disclose all of their financial circumstances. Even in the event that a PCO is granted, an applicant should not expect to be absolved from all costs. As McGinty demonstrated, the Court may be willing to restrict costs but a PCO may still leave an applicant with a substantial bill. It is also conceivable that the current period of austerity may make a Court less likely to grant a PCO that ultimately prejudices the financial position of a local authority. If you are a public body faced with an application for a PCO, the advice would be to ensure that you seek a cost cap in response.

To view the decision in Uprichard v Scottish Ministers & Fife Council, click here.

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