Appeal judges refuse environmental charity’s application for protective expenses order in wind farm challenge

By a majority of two-to-one, judges in the Inner House of the Court of Session refused the appeal for a PEO after ruling that the proceedings, estimated to cost £300,000, would not be “prohibitively expensive”.

Lady Smith, Lord Brodie and Lord Drummond Young heard that the petitioner, John Muir Trust, raised judicial review proceedings challenging a planning decision of the respondents, the Scottish Ministers, in relation to a proposed wind farm to be sited at Stronelairg in the Monadhliath Mountains, to be developed by SSE Generation and SSE Renewables, interested parties in the proceedings.

In its application for a PEO in the Outer House, JMT submitted that, as a charity, it needed “certainty as to its potential liability in expenses”, which at that stage were estimated to be £160,000.

However, the application was refused by the Lord Ordinary, who was not satisfied that the proceedings would be “prohibitively expensive”.

JMT proceeded notwithstanding its indication to the Lord Ordinary that it could not reasonably do so without the benefit of a PEO and was successful in its bid to reduce the relevant planning consent, but the respondents and the interested parties have appealed that decision, while JMT cross-reclaimed the judge’s decision to refuse to grant a PEO.

In terms of Rule of Court 58A, the court must make a PEO if it is satisfied that the proceedings are “prohibitively expensive”, which means that the applicant “could not reasonably proceed with them in the absence of such an order”.

Any PEO must provide for the applicant’s liability in expenses to be limited to £5,000 or, on cause shown, less, and a PEO must also, by way of a reciprocal cap, limit the respondent’s liability to £30,000 or, on cause shown, a higher sum.

But JMT sought to increase the reciprocal cap to £50,000, on the basis that its expenses in the reclaiming motion were estimated to be in the order of £50,000.

For the petitioner, it was submitted that under EU law NGOs had been chosen for and given a “special supervisory role of defending the environment” and that the proceedings would be prohibitively expensive on an objective basis because JMT, having been successful in the Outer House, had “reasonable prospects of success”.

It was argued that if the petitioner was not granted a PEO, it was likely to be deterred from raising similar proceedings in the future and that its current financial position would make it difficult to fund the total Outer House and Inner House expenses of £376,000.

It was also submitted that the proceedings would be prohibitively expensive on a subjective basis because the financial risk involved was the total of both Outer and Inner House expenses, and while JMT has various reserves, much of those reserves is either restricted funds or has been designated for other purposes and the free reserves of £833,000 amounted to only 4.8 months of budgeted expenditure.

While the petitioner had so far raised £167,000 through its “Stop Stronelairg” fundraising campaign, that would not be sufficient to fund both the Outer House and Inner House expenses.

It was argued that it would be unreasonable to redesignate funds if a donor had indicated a preference for a purpose other than the Stronelairg matter, and it would be unreasonable to expect the petitioners to realise assets or borrow money.

However, Lady Smith - with whom Lord Brodie agreed - held that the application for a PEO should be refused.

In a written opinion, Lady Smith said: “Taking subjective matters first, it is clear from the financial details in the ‘Information’ section above that JMT’s potential liability in relation to expenses in the Inner House (£144,000) amounts to less than the funds already raised by the Stronelairg Appeal (£167,000).

“For the reasons explained above, I do not accept that, at this stage, allowance ought to be made for JMT’s potential liabilities in relation to the Outer House but if I am wrong about that, the total potential liability of £296,000 amounts to less than would be available from those appeal funds and free reserves whilst maintaining the latter at a figure that is higher than four months’ budgeted expenditure.

“Also, I accept that regard should be had to the fact that the Stronelairg appeal is continuing with potential for those reserved funds to be increased beyond £167,000 and to the fact that any awards of expenses will not require to be met for many months.”

Regarding objective factors, the judge considered that JMT’s prospects of success and its environmental role as an NGO litigating in the public interest had to be regarded as “neutral factors”.

She added: “In all these circumstances, I cannot conclude that JMT could not reasonably proceed with the reclaiming motion in the absence of a PEO.

“I would only add that the fact that JMT are not, in my view, entitled to a PEO does not in any way foreclose the consideration of whether and how any ultimate award of expenses accords with article 11 of the EIA directive.

“Had I been satisfied that JMT had shown that they were entitled to a PEO, I would not have been persuaded that they had shown cause for the reciprocal cap to be increased to £50,000.”

Agreeing with Lady Smith’s reasoning, Lord Brodie said: “I agree that even had JMT established that it was entitled to a PEO, a case for an increase in the reciprocal cap was not made out. Moreover, I agree with your Ladyship’s observation…that refusal of this application in no way forecloses how any eventual award of expenses might be determined. I see the possibility of applying for a PEO under Rule of Court 58A as merely one way whereby the United Kingdom’s obligations under the EIA directive may be complied with.”

Disagreeing with the majority, Lord Drummond Young would have granted the PEO in respect of the proceedings in the Inner House as he considered that the total expenses, in the event that the trust was ultimately unsuccessful, would be “prohibitively expensive for it in its current financial position”, within the meaning of Rule of Court 58A read in the light of the Aarhus Convention and the EIA directive.