A trust dedicated to protecting and conserving Scotland's wild places has failed to secure a protective expenses order (PEO) in the Inner House of the Court of Session as it seeks to defend a successful challenge to a planning decision relating to a proposed wind farm.
By a majority the court refused to grant the order in a cross reclaiming motion by the John Muir Trust, which had obtained an order at first instance reducing the relevant planning consent for the development at Stronelairg in the Monadhliath Mountains.
The Trust had also failed to obtain a PEO in the Outer House, but proceeded in any event with its application for judicial review despite having indicated to the Lord Ordinary that it could not do so without a PEO.
Opposing the application were the Scottish ministers, along with SSE Generation Ltd and SSE Renewables as interested parties, and due to the length of the hearings the Trust's risk in relation to the Outer House costs was about £152,000 (on top of £76,000 it had already paid), and for the Inner House about £144,000.
The Trust had received donations towards this specific campaign of £140,000, but pledges had been received of a further £27,000 and there was some prospect of £52,000 given towards a different campaigh becoming available. As at the end of 2015, it had designated funds (marked for particular purposes, which could be changed at the trustees' discretion) of £1.4m, and free reserves of £833,000, of which £694,000 was being held to cover budgeted expenditure.
The Lord Ordinary had not been satisfied that the proceedings would be "prohibitively expensive" for the Trust so as to qualify for PEO. On appeal it was argued that objectively they could be so regarded as the Trust, as an environmental NGO, had been given a special role by the EU, it had reasonable prospects of success, without a PEO it was likely to be deterred from raising similar proceedings in future, and the amount involved was substantial. Subjectively, many of its reserves were restricted or otherwise designated funds, and it would be unreasonable to expect it to realise assets or borrow money.
Lady Smith, with whom Lord Brodie agreed, said the court should focus on the proceedings in the Inner House: the Outer House decision would be subjected to review as the reclaiming motion proceeded, Outer House expenses had yet to be determined, and all considerations including those relating to the Aarhus Convention and the Trust's status would remain open.
Regarding the Inner House costs, the funds already raised were sufficient to cover these, and even if (contrary to her view) it was appropriate to have regard, at that stage, to potential Outer House liabilities, funds were or could be made available. Prospects of success had to be regarded as a neutral factor in view of the points at issue, and the fact that a NGO performed an environmental role did not of itself entitle it to the benefit of a costs cap. The Trust had also already conducted the litigation for 20 months.
"In all these circumstances, I cannot conclude that JMT could not reasonably proceed with the reclaiming motion in the absence of a PEO", Lady Smith ruled.
Lord Drummond Young, dissenting, said EU law recognised a strong public interest in environmental protection, and the full risk of costs should not be borne only by those who sought to enforce environmental law. In cases like the present, which involved an uninhabited area, "effective challenge by non-governmental organisations assumes particular importance". Grounds for judicial review were of greater scope, which "strengthens the case for ensuring that, where individuals cannot or will not take action, non-governmental organisations may bring environmental decisions under review. In my opinion the expression 'prohibitively expensive'... must be construed against that background. For that reason the expression should not in my view be construed unduly strictly".
As the Trust's 2015 audited accounts showed a substantial deficit, and as it should be able to maintain reasonable liquidity and not have to reduce its reserves to a minimum, "the current financial situation of the Trust calls for a high level of financial prudence". It was not to the point that the court might still restrict an award, as the uncertainty was likely to "serve as a major deterrent to litigation".