Judicial Review is a court procedure whereby a claimant can challenge the lawfulness of a decision or act by a public body. Its purpose is to safeguard the rule of law, ensure fair systems are in place and improve access to justice. Any person or community who can successfully claim that they will be affected by a decision could challenge it.
A common example of this might be where a claimant challenges a recent planning decision granted by a local authority on the grounds that the correct procedures were not followed by them in reaching the decision. Public bodies, such as a local authority have to obey the law in how they take decisions and act, with strict adherence to planning processes. Once planning has been granted, there is (typically) a 6-week window during which a claimant can make an application to the court.
What This Means for Property Developers and Funders
Gemma Astbury-Dennis, Legal Indemnities Account Executive at Thomas Carroll says that bringing forward a Judicial Review case can be costly and would need to be carefully considered by a claimant before commencing proceedings.
She explains: “A decision by the court will be at their discretion depending on the greater good of the local community. For example, a proposed development might form part of the local plan or fill a significant shortfall in the local authority’s 5-year housing target. Nonetheless, in the event a claim is made and the judge awards an interim injunction that delays work commencing, a developer will face costly implications, particularly if they had planned to start work on site during the initial 6-week period.”
Awareness of Judicial Reviews has risen given the number of highly publicised challenges to local authority decisions. The risk to developers and funders cannot be ignored, with the government body under challenge winning nearly 50% of planning Judicial Reviews.
“Planning applications for development can be unpopular with the local community who will often go to great lengths to prevent or delay the development and might use a Judicial Review as an option. This can impact the timescales of a development, leading to increased or wasted costs” says Gemma.
How Indemnity Insurance Can Provide Financial Protection
An indemnity insurance policy can provide financial security to the insured and financial investors. It means that work can be commenced as soon as planning is granted with peace of mind, without having to wait until the 6-week expiry period during which a claim for Judicial Review can be made. A typical policy would protect against a range of financial losses, including:
- Loss in property value (typically the property value, with vs without planning permission, in the event an alternative or substitute planning permission cannot be obtained following a successful JR challenge).
- Legal and professional fees.
- Delay costs, i.e., works in progress, overheads.
- Abortive costs and/or contracted costs, i.e., relocating equipment and/or wasted VAT and/or Stamp Duty Land Tax.
- Interest due under a mortgage or charge and/or potential loss of a favourable rate.
- Damages, i.e., compensation.
Gemma adds: “Judicial Reviews don’t just affect development sites. Other examples include where planning is awaited in order to sell alcohol from a property, there is a change of use or perhaps where there is a material amendment to an existing planning permission. We also see challenges in respect of highway ‘stopping up’ orders and/or diversion orders, whereby highway land ceases to be a highway and the public rights of way are extinguished in law, that might be quashed or declared invalid.”
Can We Help?
At Thomas Carroll, we can arrange an indemnity policy on your behalf to cover the costs associated with a Judicial Review risk, including negotiating and advising on bespoke cover.
If you have any questions or need advice, please contact Gemma Astbury-Dennis, Legal Indemnities Account Executive on 0207 123 6826 or at email@example.com.