REUTERS | Laszlo Balogh

Fixed recoverable costs – The Big Debate: Neighbourhood tort actions: the costs balance

One area of litigation that needs to be considered in the context of Jackson LJ’s review into extending the present civil fixed recoverable costs regime in England and Wales is neighbourhood tort claims for noise, dust and odour nuisance, often instigated by individuals or groups of individuals against an authority or corporate entity.

Consideration at the present time coincides with the recent findings of the Aarhus Convention Compliance Committee as to whether the costs regime in England and Wales that applies to these claims needs to comply – and does comply – with the Convention aim of ensuring that claims within its scope are not “prohibitively expensive”. The Committee’s findings suggest that there is work to be done.

The difficulties for neighbourhood tort actions

This is a complicated area to regulate from a costs perspective. Individual claims are usually small in value, and there should ideally be a mechanism for having them dealt with quickly and cheaply. However, no matter how small, the claims can often be evidentially and procedurally complex: particularly when, as is common, expert evidence is needed to support the arguments of one side or the other, or multiple claimants are complaining of different nuisances from the same source. In these circumstances, fixed fees may not be appropriate. These are precisely the types of challenge being addressed across other litigation areas by Jackson LJ’s review.

Claims in this area are often brought as group litigation, albeit that issues will often not be identical across the group. Careful structuring and rigorous case management of the group litigation order (GLO) is vital, but, itself, will add to the expense of running and defending claims of this type.

This is also a complicated area to regulate because of the existence of the Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (the Aarhus Convention). Under paragraphs 3 and 4 of Article 9 of the Aarhus Convention (to which the UK and the EU are parties):

“… judicial procedures to challenge acts or omissions of private persons and public authorities which contravene provisions of its national law relating to the environment” must not be “prohibitively expensive”.

The history

A costs environment satisfactory to both claimants and defendants in this area has proved elusive to date.

Before the Woolf Reforms in 1999, neighbourhood tort claims for noise, dust and odour nuisance were rare because the costs risks were very unattractive to claimants, even where they were clearly suffering a nuisance.

Things changed post-Woolf. Neighbourhood tort claims were mounted with increasing regularity, scale and confidence. Claimants could fund cases through increasingly available conditional fee agreements (CFAs) and after the event (ATE) insurance and, ultimately, claim back the CFA success fee and ATE insurance premium if they won. Essentially, the cases became risk-free to claimants.

When claimants bear no financial risk, claimant groups inevitably swell to include those with a tenuous claim at best, but who see themselves as having nothing to lose by bringing a claim. Unfair commercial pressure exerted on defendants by unrealistically large groups of claimants, bearing no financial risk, started to become apparent – the very “chilling effect” criticised by Jackson LJ in his 2010 Final Report into civil litigation costs.

The Jackson reforms in 2013 put an end to the recoverability of the CFA success fee and ATE insurance premium in this area. Claimants had to think harder about whether the costs risks were worth running. The number of neighbourhood tort claims for noise, dust and odour nuisance started to diminish.

Claimant lawyers quickly began to push for changes that would shift the balance of costs risk more in the claimant’s favour.

Referring to the Aarhus Convention, they have tried to claim that environmental civil claims are now “prohibitively expensive” to bring as things currently stand, and that this is a breach of a fundamental requirement of the Convention.

Thus far, their efforts have had little traction with the UK courts. See, for example, the 2014 private nuisance case of Austin v Miller Argent (South Wales) Limited, where it was decided that whilst cases in private nuisance can in principle fall within the scope and requirements of the Aarhus Convention, most (including the case of Mrs Austin herself) do not.

Nor have they obtained much traction with the Ministry of Justice (MoJ), which decided in November 2016 not to extend the current Environmental Costs Protection Regime (which applies to matters that do fall within the Convention’s scope) to private nuisance cases.

However, the matter is not set in stone. Notwithstanding the decision that it has taken, in November 2016 the MoJ promised to continue considering how best to address perceived costs issues in private nuisance cases.

In addition, the findings of the Aarhus Convention Compliance Committee on 29 November 2016 (in response to being asked to consider costs implications to claimants in private nuisance cases like Austin) indicate that the Committee is rather more supportive of private nuisance proceedings falling within the scope of the Aarhus Convention than the government or the UK courts have been to date. Furthermore, the Committee is unconvinced that such proceedings are not prohibitively expensive for claimants to bring.

The current position

If there is an imbalance, Jackson LJ’s consideration of the civil fixed recoverable costs regime represents an opportunity to look at whether fixed costs could address this, for claimants and defendants alike.

For claimants, it is questionable whether a costs capping or fixed costs regime would be an improvement on the current position. The problems aired for other types of claim at the recent consultation meetings held by Jackson LJ for his fixed costs review apply equally to neighbourhood claims: for example, the fact that, for many individual claimants, funding even a fixed or capped amount from their own resources would prohibit them from making a claim. Funding – and funded ATE – may be available in the context of a group claim. However, ultimately, it may eat into damages awards, and claimant lawyers need to identify a large group and a strong claim in order to make a claim economically viable.

For defendants, it is vital that the costs effect of group litigation is considered before any fixed or capped costs regime is imposed. For example, the “chilling effect” for defendants will not be overcome where group claimants are entitled to recover the individual fixed/capped amount multiplied by the number of claimants. Defendants will argue that fixed fees for individuals should not indirectly incentivise claimant lawyers to make claimant groups as large as possible.

Given the often complex nature of these claims, if costs are to be curtailed but access to justice is to be achieved, the litigation process itself will need some careful streamlining. Perhaps lessons can be taken from the Shorter Trials Scheme and the practices in the Intellectual Property Enterprise Court (IPEC), but the additional dynamics of group litigation for neighbourhood torts may pose problems.

It is to be hoped that the review by Jackson LJ takes full account of the history of the current position (including the positions taken by the Aarhus Committee, the MoJ and the court itself), and that any introduction of fixed costs in this area maintains a sensible balance which suits claimants and defendants in neighbourhood claims.

Berwin Leighton Paisner Aidan Thomson

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