Protective expenses hearings are not detailed inquiries, judges warn

Applications for protective expenses orders should not lead to detailed investigations of a party's means, the Inner House has stated.

Lady Paton, Lord Menzies and Lady Clark of Calton made the comments in allowing a reclaiming motion by Mark Gibson against the Lord Ordinary's refusal to grant an order limiting his liability for the respondents' costs in a judicial review of the Scottish ministers' refusal to hold a public inquiry into a proposed wind farm development.

Mr Gibson was one of more than 4,700 objectors to the development, near Dalmellington, Ayrshire. He had bought the estate on which he lived from his own earnings and restored it from a derelict state to a "catalyst for community regeneration". He drew a personal income of about £18,000 a year from the estate; he had a pension fund which would deliver further income of about £20,000. He also had borrowings totalling over £300,000. Expenses of all parties in the case were estimated at more than £170,000.

The Lord Ordinary considered it would be possible for Mr Gibson to realise assets if necessary to meet costs, and was not satisfied that he could not reasonably proceed in the absence of a protective order.

Lord Menzies, speaking for the court, said the Lord Ordinary had focused on factors relevant to the subjective test but had overlooked the objective test which also had to be applied. Even if it might be thought that he could meet the estimated costs, it did not follow that it was reasonable that he should be required to do so. The estate was unfragmented and only insignificant plots had previously been sold off; the Lord Ordinary was wrong to say that the extent of the lands had not beem static.

Further, Mr Gibson's loan facilities were for specific purposes and could not be used to fund litigation. It was legitimate to have regard to his pension fund, but would not be reasonable to require him to withdraw the significant sum involved.

It was also not an argument that the development was already nearing completion and the ministers would be very unlikely to refuse consent at the end of the day: they would be obliged to consider any fresh application on the merits.

The order sought would therefore be granted, limiting Mr Gibson's liability in expenses to the respondents and the interested party to a cumulative total of £5,000 and limiting the liability of the respondents and interested party in expenses to the petitioner to £30,000.

In expressing his concern about the lengthy hearings before the Lord Ordinary and the Inner House, Lord Menzies added: "We consider that in the particular circumstances of this case, a more expeditious disposal should have been achieved. Looking to the future, we express the hope that such applications can be disposed of much more quickly. They are dealt with by motion, with a limited amount of documentary material being required in support of the motion. It is not an opportunity for a respondent to subject an applicant to intrusive and detailed investigation of financial circumstances.

"In most cases, we do not consider that it will be appropriate for the court to look behind this material, or (as happened in this case) to require parties to provide competing valuations of assets such as pension funds. In exercising its powers under Chapter 58A, the court is not engaged in an analysis of evidence, nor is it hearing a proof. In most applications for a PEO we would expect submissions for all parties to be capable of being concluded within a total of about one and a half hours (as is the case in an application for leave to appeal), with the court usually being able to give an immediate ex tempore judgment."

Click here to view the court's opinion.