Austin & Ors v Miller Argent (South Wales) Ltd

This judgment is in seven parts, namely;

In this appeal the prospective claimants in a proposed group action appeal against an order dismissing their application under section III of Part 19 of the Civil Procedure Rules (“CPR”) for a Group Litigation Order (“GLO”).

The dispute between the parties concerns open cast mining operations which, it is alleged, caused nuisance by dust and noise to local residents. Those affected by the nuisance intend to claim damages and an injunction.

Because the subject matter of the appeal is situated in Wales and the application for a “GLO” was made in Cardiff, the Court of Appeal sat in Cardiff to hear the appeal.

At the time of the hearing below there were five hundred and sixteen prospective claimants. Their number has now increased to five hundred and forty nine. I shall refer to these individuals as “claimants”, although none has yet issued a claim form.

The claimants’ solicitors are Richard Buxton Environmental and Public Law, to which I shall refer as “Richard Buxton”. The defendant’s solicitors are DLA Piper UK LLP, to which I shall refer as “DLA”.

The claimants’ counsel both in this court and at first instance is Mr. David Hart QC. The defendant’s counsel in this court are Mr. Geraint Webb and Mr. James Pereira. Mr. Webb deals with GLO issues. Mr. Pereira appeared below but Mr. Webb did not.

In this judgment I shall use the following abbreviations:

The Aarhus Convention requires that there be proper consultation in respect of all administrative decisions which will affect the environment. It came into force in October 2001. It was ratified by the UK and the European Community in 2005. Articles 9.3 and 9.4 of the Aarhus Convention provide as follows:

A PCO is a remedy fashioned by judges over the last decade to protect claimants in certain public law proceedings against excessive liability for adverse costs. The guidelines which cover the grant of PCOs were set out by the Court of Appeal in R (on the application of Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192; [2005] 1 WLR 2600 at paragraphs 74-76. These guidelines have been the subject of subsequent glosses in a number of decisions of this court.

The Civil Procedure Rule Committee has not yet made any rules to regulate the making and effect of PCOs. There is no judicial decision on the question whether a PCO can be granted in private nuisance litigation concerning alleged environmental damage.

After these introductory remarks, I must now turn to the facts.

At Ffos-y-fran on the eastern side of Merthyr Tydfil there is an area of derelict land, which has historically been used for coal and slag tipping. On 11 April 2005 a committee of the Welsh Assembly granted planning permission for a reclamation project at Ffos-y-fran, known as the “the Ffos-y-fran Land Reclamation Scheme”. This project involves the removal of coal from the site by open cast mining, followed by the restoration of the land to urban common land and agricultural land, as appropriate.

The defendant is carrying out the Ffos-y-fran Land Reclamation Scheme. The defendant will use part of the profits from the sale of coal to fund the restoration of the land. The defendant commenced work on site in June 2007. Under the terms of the planning permission the defendant must cease coal extraction within fifteen years and three months from commencement of development. The defendant must complete final restoration of the land within seventeen years, six months from commencement of development.

The claimants are residents of Merthyr Tydfil, who live in the vicinity of the Ffos-y-fran Land Reclamation Scheme. Some claimants are householders, being either owners or tenants of their homes. Others are children of householders. The claimants contend that the dust and noise generated by the coal extraction and associated works at Ffos-y-fran constitute a private nuisance.

On 15 June 2010 Richard Buxton issued an application for a GLO in order to regulate the claimants’ prospective litigation. Mr. Paul Stookes, a partner in Richard Buxton, made a witness statement in support of the application. In paragraph six Mr. Stookes stated:

Mr. Stookes then set out the history of earlier, unsuccessful public law challenges to the Ffos-y-fran Land Reclamation Scheme, in which his firm had acted for the objectors. Draft Particulars of Claim were annexed to Mr. Stookes’ witness statement. The draft Particulars of Claim assert that the claimants’ homes are between thirty six metres and one kilometre from the site. After setting out the hours of work the draft Particulars of Claim continue:

On the basis of these alleged facts the claimants claim damages and an injunction to prevent continuance of the nuisance.

At a case management conference on 28 July 2010 Judge Milwyn Jarman QC gave directions for the defendant to serve evidence and the parties to identify issues. He directed that the GLO application be re-listed on a date after 10 September 2010.

On 26 August 2010 Mr. Paul Stone, a partner of DLA, filed a witness statement in opposition to the claimants’ application. In this statement Mr. Stone set out the background history of the Ffos-y-fran Land Reclamation Scheme and the various public law challenges in some detail. He described the measures taken by the defendant to control dust and noise during the works and denied that the coal extraction and associated works gave rise to any actionable nuisance. Mr. Stone set out two objections to the grant of a GLO. First, there was insufficient information about the proposed claims. Secondly, it was not clear that the claimants had funding in place, either to cover their own costs or to meet any adverse costs order.

The date fixed for the adjourned hearing of the claimants’ application for a GLO was 20 September 2010. On this occasion judge Jarman further adjourned the hearing of the claimants’ application to a date after 1 November. He directed that the claimants should file evidence in respect of:

On 27 September 2010 Mr. Stookes filed a second witness statement on behalf of the claimants. In relation to funding Mr. Stookes stated that his firm was acting on a CFA, which would mean that the claimants would have no liability to pay his firm’s costs. In relation to adverse costs, Mr. Stookes stated that he was seeking ATE insurance in respect of the proposed litigation.

Turning to the substantive claim, Mr. Stookes maintained that he had provided sufficient details. He had informed DLA where the individual claimants resided. Mr. Stookes produced a letter in which the defendant admitted having caused a nuisance on an occasion in October 2007. He produced some car cleaning vouchers provided by the defendant to local residents. Mr. Stookes also produced a noise assessment report prepared by the Merthyr Tydfil Council’s Public Health Department, dated 7 July 2008. In paragraph 14 Mr. Stookes stated:

His Honour Judge Jarman QC heard the application for a GLO at Cardiff on 11 November 2010. He rejected the application on two grounds. First, there was insufficient information about the claims. Secondly, it was uncertain whether the claimants could fund the litigation. The judge also ordered the claimants to pay the defendant’s costs of the GLO application on the standard basis.

The claimants were aggrieved by the order of Judge Jarman. Accordingly they have appealed to the Court of Appeal.

By a notice of appeal dated 7 December 2010 the claimants appealed against Judge Jarman’s order dated 11 November 2010. Shortly after serving the notice of appeal the claimants’ solicitors ascertained that no ATE insurance was obtainable for this proposed litigation. Meanwhile the defendant’s solicitors hastened to prepare their bill of costs. In December 2010 DLA served a bill of costs for opposing the GLO application in the sum of £257,150.

The claimants’ notice of appeal as supplemented by their skeleton arguments essentially contained three grounds of appeal, which I would summarise as follows:

The judge should not have been deflected from granting a GLO by funding considerations. Although (as now known) ATE insurance cannot be obtained, the claimants will be entitled to a PCO, since their claim falls within article 9 of the Aarhus Convention.

Since the judge did not consider that the claimants had furnished sufficient information about their proposed claims, he ought to have adjourned the application, in order that the claimants could provide further information.

The judge ought not to have ordered the claimants to pay the defendant’s costs of the GLO application assessed on the standard basis. Such an order would expose the claimants to a liability for prohibitive expense, contrary to article 9.4 of the Aarhus Convention.

I should add that the claimants’ grounds of appeal contain reference to the EIA Directive. It is now common ground, however, that that directive does not apply to this case.

In the course of the hearing of this appeal it became clear that the second ground of appeal (adopting my numbering set out above) gave rise to difficulties. Accordingly, the claimants’ counsel amended his notice of appeal to add an additional ground of appeal as follows:

I shall refer to this as the fourth ground of appeal, although different numbering has been adopted in the claimants’ draft.

In addition, there is before this court an application by the claimants for a PCO, in order to limit their liability for adverse costs in respect of the present appeal. We are asked to deal with this application at the same time as the substantive appeal.

Thus, in the appeal as finally constituted, there are three separate questions for us to address. First, did the judge err in refusing to make a GLO? Secondly, did the judge err in ordering the claimants to pay the defendant’s costs of the application? Thirdly, should this court make a PCO in respect of the present appeal? I must deal first with the question of the Group Litigation Order.

Section III of Part 19 of the CPR provides a procedure for managing group litigation. Rule 19.11 provides:

The procedure contained in section III of part 19 of the CPR enables group litigation to be managed by the parties and by the courts in an efficient and cost effective manner. Nevertheless the decision whether to make a GLO is a matter for the court’s discretion. The making of a GLO commits both the parties and the court to the allocation of substantial resources to the conduct of group litigation. The court will not make a GLO before it is clear that there is a sufficient number of claimants, who seriously intend to proceed and whose claims raise common or related issues of fact and law.

In the present case, as at 11 November 2010 it was not clear that there was a sufficient number of claimants who seriously intended to proceed. ATE insurance had not been obtained. At paragraph five of his judgment, the judge recorded the following submission of Mr. Hart:

Rules 44.18 – 44.20, which relate to costs capping, would be of little assistance to the claimants in the present litigation. Although Mr. Hart has argued before this court that there is jurisdiction to make a PCO in private nuisance litigation, he made no such submission to Judge Jarman. Nor did he refer to the provisions of the Aarhus Convention.

On the basis of the evidence and submissions before Judge Jarman, it was far from clear that any claimant would be in a position to proceed. Only two claimants had BTE insurance. The limit of that BTE cover was £50,000. Furthermore far more than two claimants are necessary to constitute a viable group action.

As at 11 November 2010 no claimant had issued a claim form and that remains the position today. No witness statement from any individual claimant was available and that remains the position today. The information required by paragraph 3.2(5) of Practice Direction 19B was not before the court and that remains the position today. The judge’s conclusions on the basis of the material before him were as follows:

As indicated in Part 3 above, Mr. Hart attacks this decision on two alternative bases. First, the judge should have adjourned the claimants’ application for a GLO, rather than dismissed it. Secondly, if the judge was not adjourning the application, he ought to have granted it.

In my view, the proposition that the judge should have adjourned the application for a GLO is untenable. The judge had already adjourned this application more than once before the hearing on 11 November 2010. No one asked him during the hearing to adjourn the matter yet again. The judge cannot sensibly be criticised failing to adjourn the hearing of the claimants’ application for a GLO on his own initiative. Indeed immediately after Judge Jarman gave judgment, when the question of adjournment was belatedly canvassed, the claimants’ counsel indicated that he was not pursuing any application for the matter to be adjourned.

I turn now to Mr. Hart’s second line of attack, namely that the judge should have proceeded immediately to issue a GLO. Although more promising than Mr. Hart’s first line of attack, this too must fail.

The judge was making a discretionary decision in relation to case management. On the basis of the evidence and submissions before him, the view which the judge took of the prospective litigation, as set out in paragraphs 14 and 15 of his judgment, was a perfectly reasonable one. In those circumstances the judge was exercising his discretion reasonably when he refused to make a GLO. There is no basis upon which this court should, or indeed could interfere with that exercise of discretion. The judge cannot be criticised for failing to conclude that the claimants would have the benefit of a PCO, when no such submission had been made on the claimants’ behalf.

Accordingly, my answer to the question posed in Part 4 of this judgment is “no”. I must now turn to the judge’s order for costs.

The claimants contend their claim for private nuisance is litigation which falls within article 9.3 of the Aarhus Convention. Accordingly article 9.4 requires that the litigation should not be “prohibitively expensive”. The defendant’s bill of costs for opposing the GLO application amounts to £257,150. The claimants maintain that that sum constitutes prohibitive expense. Accordingly the claimants, being of modest means, contend that their costs liability should be limited to nil, alternatively a very low sum. The claimants therefore invite this court to set aside the costs order made on 11 November and to remit the matter to the judge for reconsideration.

The defendant opposes this application on four principal grounds. First, the defendant says that this action does not fall within the Aarhus Convention. Secondly, and in any event, the court does not have jurisdiction to make a PCO in these proceedings. Thirdly, even if the judge did have jurisdiction to make a PCO, he was not invited to do so at the hearing on 11 November 2010. It is now too late to raise this point. Fourthly, and finally, the defendant contends that the costs which the judge has ordered the claimants to pay do not amount to prohibitive expense.

Before I plunge into the issues, it may be helpful to set out figures. This court more than once in recent months has expressed concern about the level of costs which the defendant is seeking. In response to these concerns Mr. Pereira has prepared a breakdown of the figures, which he handed up on the second day of the appeal. Mr. Pereira accepts that VAT is not recoverable by the defendant against the claimants. He also accepts that a thirty per cent reduction is likely on detailed assessment. Accordingly, the total costs liability is reduced to £153,646 on Mr. Pereira’s figures. Although no GLO has been made, the defendant proposes to treat each claimant as liable for no more than his pro rata share of costs and will not seek any order for costs against those claimants who are children. On this basis, the costs liability of each adult claimant pursuant to the judge’s costs order is calculated to be £361.52. Mr. Pereira also states that the defendant will not seek to enforce its costs order against any claimant who does not proceed further with an application for a GLO or commence any claim against the defendant in respect of the same or similar subject matter.

The court finds this breakdown of the figures to be helpful. For the avoidance of doubt, the court expects that the costs liability of any individual claimant will be assessed in a sum no higher than £361.52. Furthermore, and again for the avoidance of doubt, the defendant is bound by the assurances which it has given to this court through counsel (a) not to enforce the costs order against any child and (b) not to enforce the costs order against any adult claimant, unless that claimant proceeds further with an application for a GLO or commences any claim against the defendant in respect of the same or similar subject matter.

In relation to the applicability of the Aarhus Convention and the power of the court to limit the claimants’ costs liability, argument has centred upon the decision of this court in Morgan and Baker v Hinton Organics (Wessex) Ltd [2009] EWCA Civ 107. In Morgan the claimants alleged that smells from a composting site near their homes constituted a private nuisance. Following the discharge of an interim injunction, Judge Seymour ordered the claimants to pay the costs of the injunction proceedings. The claimants appealed against the costs order on the ground that this imposed upon them prohibitive expense, contrary to article 9.4 of the Aarhus Convention. Giving the judgment of the court, Carnwath LJ summarised the status of the Aarhus Convention in English law as follows:

I should add that in the present case, as in Morgan, neither of the two EC environmental directives are applicable.

After reviewing the relevant authorities, the court in Morgan was content to assume, without deciding, that the Aarhus Convention was capable of applying to private nuisance proceedings, when the nuisance alleged not only affected the claimants but also the environment of a whole locality: see paragraphs 42-44 of the judgment.

Despite assuming that the Aarhus Convention was applicable, the court dismissed the claimants’ appeal. The grounds upon which the court did so are set out as follows in paragraphs 49 and 50 of Carnwath LJ’s judgment:

In my view, precisely the same “insuperable objection” exists to the claimants’ appeal in the present case. No reference was made to Aarhus at the hearing below and no evidence was adduced in order to establish what expense would be prohibitive. It should, perhaps, be noted that the claimants in the present case are represented by the same solicitors and counsel as were the claimants in Morgan. Despite that circumstance, the claimants did not raise their Aarhus argument at the proper time, namely at the hearing on 11 November 2010.

Mr. Hart submits that it was reasonable not to raise the Aarhus argument before Judge Jarman, because that argument was capable of being raised on detailed assessment. That door was not shut until 15 December 2010 when the Supreme Court gave judgment in R (Edwards) v Environmental Agency (no.2) [2010] UKSC 57; [2011] 1 WLR 79. I cannot accept this argument. The critical feature of Edwards was that that litigation fell under the EIA Directive. The House of Lords held that costs officers on a detailed assessment did not have power to reduce costs in order to secure compliance with that Directive. This decision of the Supreme Court does not affect the present case. It has been clear since Morgan that the claimants’ argument based on Aarhus should be raised, if at all, before the judge making the costs order.

In my view, the Court of Appeal’s decision in Morgan compels the rejection of this limb of the claimants’ appeal.

Accordingly, my answer to the question posed in Part 5 of this judgment is “no”. Next and finally, I must turn to the claimants’ application for a Protective Costs Order.

The claimants apply for a PCO in respect of the present appeal on the grounds that an adverse costs order would involve them in prohibitive expense. The claimants argue that although this is a private nuisance claim, it concerns the environment and thus falls within article 9.4 of the Aarhus Convention. It is a claim which has public law elements.

The defendant resists this claim on a number of grounds. In particular, the defendant says that the costs of the present appeal do not amount to prohibitive expense within article 9.4 of the Aarhus Convention. Furthermore, the court does not have jurisdiction to grant a PCO in a private nuisance action, even if the Aarhus Convention is engaged. In that regard the defendant relies upon the Court of Appeal’s decision in Eweida v British Airways [2009] EWCA Civ 1025; [2010] 1 Costs LR 43.

The claimants’ application for a PCO in respect of their appeal was not issued until 4 March 2011. It was listed for hearing on 28 June 2011. An issue arose between the parties as to whether the claimants’ substantive appeal should be heard at the same time as the application for a PCO. The claimants maintained that both matters should be dealt with at the same time. The defendant argued that the PCO application should be determined first. This court acceded to the claimants’ submissions and ordered that both matters be dealt with at the hearing commencing on 28 June. When making that order, the court capped the recoverable costs of each party in respect of the PCO application in the sum of £3,500.

The timing of this application for a PCO may be thought to render the application redundant, essentially for the reasons stated by Carnwath LJ at paragraph 35 of Morgan. Nevertheless the application has been made and I shall address it. The defendant has put cost figures before the court, calculated in the same way as the costs figures set out in Part 5 above. These calculations show that if the defendant is awarded its costs of the appeal, each claimant (excluding children) will be liable to pay £192.04. That costs order will not be enforced against any claimant who does not proceed further with an application for a GLO or commence any claim against the defendant in respect of the same or similar subject matter.

For the avoidance of doubt, this court deals with the present issue on the basis that the figure of £192.04 per claimant will not be exceeded. Furthermore, and again for the avoidance of doubt, the defendant is bound by the assurances which it has given to this court through counsel (a) not to enforce the costs order against any child and (b) not to enforce the costs order against any adult claimant, unless that claimant proceeds further with an application for a GLO or commences any claim against the defendant in respect of the same or similar subject matter.

The claimants’ solicitors have put in a helpful table setting out the earnings of a representative sample of claimants. This is contained in Mr. Stookes’ fourth witness statement, dated 19 April 2011. Against the background of these figures, I do not consider that a costs liability of £192.04 per head is beyond the means of the claimants. Nor do I consider that such a costs liability would amount to “prohibitive expense” within article 9.4 of the Aarhus Convention.

I am fully alive to the need to control the costs of civil litigation and, indeed, have put forward a number of proposals to that end which are currently under consideration. The fact remains, however, that every uninsured person who embarks upon litigation, must accept some degree of cost risks. There are strong policy reasons why this should be so, not least to maintain proper discipline over litigation, to incentivise reasonable litigation behaviour and to reduce the financial burden upon those who are vindicated. The Aarhus Convention does not require that environmental litigation should be cost free, merely that it should be not prohibitively expensive.

In those circumstances, the question whether a PCO can ever be made in the context of private litigation does not arise for decision. Since the issue is academic in the present case, I shall not address it.

Let me now draw the threads together. The claimants are not entitled to seek a PCO in respect of the present appeal for the simple reason that an adverse costs order will not involve the claimants incurring prohibitive expense. Accordingly, the claimants’ application for a PCO must be dismissed.

For the reasons set out in Parts 4 and 5 above, if my Lords agree, the claimants’ appeal is dismissed.

For the reasons set out in Part 6 above, if my Lords agree, the claimants’ application for a PCO is dismissed.

I agree.

I also agree.