Jenny Dickson: Funding of litigation against public bodies in Scotland
Jenny Dickson of Morton Fraser discusses how the high-profile beaver protection case involved the use of crowdfunding and a protective expenses order to fund the litigation.
One Scottish case which captured the headlines in 2021 was the battle to save the beavers. An environmental charity, Trees For Life, challenged the issuing of licences to kill beavers. The case was a judicial review, brought against both the Scottish Ministers and NatureScot, the organisation with responsibility for certain licensing decisions, including licenses for the killing of beavers. The popular press reported on the challenge of preserving beavers while also ensuring that agricultural land is not damaged by them. As lawyers, there is another interesting aspect to this case: the funding of the litigation.
Trees for Life raised money for their judicial review through crowdfunding. They were very successful, building up a fund of £60,000 for the litigation. However, that amount was not nearly sufficient when the potential adverse costs they could be obliged to meet, if unsuccessful in their case, was estimated at £200,000. They successfully argued that exposure to the other side’s costs would be objectively unreasonable and prohibitively expensive. As a result of this, they obtained a protective expenses order.
What is a protective expenses order (PEO)?
A PEO protects a party to legal proceedings by either capping their potential liability for adverse costs or relieving them of any liability. PEOs enable cases of general public interest to be advanced, by removing some of the financial burden. The Rules of the Court of Session contain provision for PEOs in environmental cases. The background to these can be found in the Aarhus Convention, which sets out that signatory states must ensure access to environmental justice. In Scotland, it is implemented by 58A of the Rules of the Court of Session. Its terms are similar, but not identical, to the equivalent provision in the English Civil Procedure Rules. For example, for some PEOs under Rule 58A, the applicant requires to demonstrate that they have sufficient interest in the subject matter of the proceedings.
If the court action is not an Aarhus Convention claim, a PEO can still be sought under the common law. An example of this was the Keatings case in 2020 which sought declarator that the Scottish Parliament can legislate for an independence referendum. In that case the pursuer sought a PEO under common law. His application was refused. One criterion considered was whether it was just and reasonable to grant the PEO, considering the financial resource of the parties. Although Mr Keatings is a man of modest means, he had access to considerable potential funding through his social media account and ability to crowdfund. The court was also not satisfied that he would discontinue proceedings if the PEO was not granted. It considered the possibility that there would be a further round of crowdfunding, to enable the court action to proceed.
Both the cases we consider here raised some funds through crowdfunding. It is an increasingly popular method of funding litigation in Scotland against public bodies. Donors are attracted by a shared interest in the outcome of the case, or the public or political interest which is being advanced.
Litigants can fund their own legal expenses, as well as potential adverse costs, this way. They may do it by raising sufficient funds for the entire litigation at the outset, or in stages. If ultimately successful in the litigation, they may recover costs from the other party. Normally, the crowdfunding arrangement would stipulate that those costs are not to be returned to each of the individual donors. That means the litigant may have a financial interest in the case and this argument was considered in the Keatings application for a PEO. Litigants using crowdfunding need to take care to ensure the terms on which they set up the arrangement are suited to their needs. Equally, public bodies should consider those same terms to ensure they understand any implications of the funding on the litigation itself, including on arguments for supplementary financial support through a PEO.
Funding: what next for litigation against public bodies?
We live in an era where litigation is used both to challenge decisions of public bodies and to drive political agendas. The courts play a vital role in ensuring that decisions can be challenged but litigation is expensive, and it can often be difficult for parties to pursue their cases.
We have now seen a number of cases funded through multiple sources, including crowdfunding and PEOs. The Keatings case provided some guidance as to how the court would apply the common law test for PEOs, and of the potential interaction between crowdfunding and PEOs. The popularity of these funding options may see new types of legal challenge to public bodies with cases concerning issues of interest to donors more likely to attract crowdfunding.
The judicial review against the Scottish Ministers and NatureScot was ultimately successful. The beavers were given reprieve from the licences to cull them, and they live on to fight another day. And with these funding options, so too will many other potential litigants in future cases against public bodies.