What are Protective Expenses Orders and how do you get one?

The cost of litigation can be a significant barrier to people seeking justice in the Scottish courts. Protective Expenses Orders (PEOs) allow individuals, in certain circumstances, to limit the amount of expenses (i.e. legal costs) that they may have to pay in the event that they lose the case.

PEOs are a valuable tool to promote access to justice for individuals who might not otherwise be able to afford to bring legal action and can help level the playing field for parties with limited financial resources.

The Corner House Principles

The rules on who can apply for a PEO and in what circumstances are derived from an English Court of Appeal case, R (Corner House Research) v Secretary of State for Trade and Industry, and are known as the “Corner House Principles”.

According to the test established in that case, if a court action has a real prospect of success, a PEO may be made if:

• issues of general public importance require to be resolved
• the applicant has no private interest in the outcome
• having regard to the likely costs and the financial resources of the parties it is fair and just that a PEO be made, and
• absent a PEO the applicant will probably discontinue the proceedings and will be acting reasonably in so doing.

Applying the Corner House Principles

The application of these principles was recently considered by the Court of Session in Halley v The Scottish Ministers. Mr Halley is an advocate and part-time sheriff who faced disciplinary proceedings following public comments he made about another member of the judiciary. A Tribunal was convened to consider the allegations and the initial costs of Mr Halley’s legal representation in the proceedings were met by the Scottish Ministers. Mr Halley then went on to raise a judicial review challenge to aspects of how the Tribunal was constituted. He submitted that the legal costs associated with this challenge, as well as his ongoing costs before the Tribunal, should be met by the Scottish Ministers.

The Scottish Ministers refused to provide any further funding. The court concluded that they had fulfilled their duty and were not legally obliged to finance Mr Halley’s litigation costs.

Mr Halley challenged this decision not to provide further funding and also sought a PEO to limit his potential liability for expenses in the further proceedings.

Applying the Corner House principles, the Inner House of the Court of Session observed that Mr Halley’s petition is not predominantly altruistic in its motives. Newton Mearns Residents Flood Prevention Group for Cheviot Drive v East Renfrewshire Council [2013] CSIH 70, confirmed that PEOs are aimed at cases where public interest rights, as opposed to someone’s private rights. In this case, the court concluded that Mr Halley’s strong private interest is too significant to make it appropriate to treat the case as suitable for a PEO under the Corner House Principles. The court had regard to Mr Halley’s individual circumstances, including his own legal expertise and his financial situation. With regard to all of these factors, the judges were satisfied that refusing the PEO did not prevent access to justice for Mr Halley.

Next steps

In practice, the Scottish courts have broad discretion when deciding whether to grant a PEO, and will consider a range of factors when making their decision, including the financial means of the parties involved, the complexity of the case, and the potential costs of the proceedings. The courts will also consider whether the case raises issues of public interest or involves questions of law that have not been fully resolved.

If you are involved in litigation that raises issues of general public importance, please contact Jennifer Jack and Calum Gee in Harper Macleod’s specialist team for advice on applying for, or opposing, a protective expenses order.