We are continuing our series of insights relating to key risks facing the Real Estate sector. Greg Spiteri, our Head of Sales and Marketing for the Real Estate Division, discusses the key area of Judicial Review for developers or investors when planning projects.
What is Judicial Review?
Judicial Review is a type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body. In other words, Judicial Reviews are a challenge to the way in which a decision has been made, rather than the rights and wrongs of the conclusion reached.
It is highly likely that most planning applications in the UK will receive some form of objection for a variety of reasons. An individual or a group of objectors can challenge the courts to review the legality of the local authority’s decision to grant planning.
The rationale for the objection could be based on:
- Material considerations.
- Legitimate expectations.
- Mistake of fact.
- Duty to provide reasons.
- Unfair procedure.
If the action is successful the result usually means that a development is quashed or at least requires amendment in order for resubmission to occur. It often follows that a more detailed consultation process is required on matters such as environmental impact, in order for the development to have a chance of achieving the go ahead.
Any of the potential financial losses can be covered by a Judicial Review indemnity policy. Stackhouse Poland has strategic relationships with the key insurers that provide this specialist cover such as CLS Risk Solutions. Cover can be provided, subject to underwriting requirements for each stage of an “Event”.
Before the event
A developer’s application for planning permission may be met with public opposition (either with or without a material objection threatening Judicial Review).
During the event
A planning permission is in the process of being challenged in the courts by way of a Judicial Review.
After the event
A planning permission was challenged by way of a Judicial Review. A first instance court decision has refused the Judicial Review challenge, but the developer remains exposed to a potential appeal risk in the upper courts.
Benefits of coverage
Each element has its own distinct policy features and we would be happy to discuss these in greater depth but the general benefits of coverage are:
- Removal of financial risk from the development, thus helping to secure lending.
- Allowing the developer to begin works on site immediately after planning permission is granted without carrying the exposure associated with a potential Judicial Review challenge.
- Protection from financial implications caused by delays including the servicing of loans.
- Avoid early delays in development that could incur financial penalties due to missing deadlines.
Benefits of coverage
It is essential to be not only aware of risk but seek professional guidance on the type of risks that can be placed with the specialist insurance market. Not only will this protect your balance sheet but also avoid unnecessary delays in delivering a project.
Student Accommodation Student accommodation developments are often met with considerable opposition from the local community.
As a result, many objectors will look to utilise the Judicial Review process as a means to frustrate or prevent the development. Regardless of whether the Judicial Review application has substantial grounds to challenge, the risk of a temporary injunction prior to the court’s decision is likely to result in significant delays. As a result, developers will be exposed to substantial loss of revenue should they fail to meet the deadlines necessary to coincide with the academic term dates.
Should the development miss their September deadline, the ability to rent the student accommodation diminishes dramatically. A CLS Judicial Review policy will remove financial exposure linked to a Judicial Review challenge, including; abortive costs, legal fees, delay costs, cost of demolition and reinstatement, additional costs in relation to a revised planning application.
Renewable Energy Sector Wind and solar farms are often met with considerable opposition from the local community. As a result, many objectors will look to utilize the Judicial Review process as a means to frustrate or prevent a development.
Regardless of grounds, the risk of a temporary injunction prior to the court’s decision is likely to result in significant delays. This will result in developers being exposed to loss of revenue and unable to service financial commitments. A Judicial Review policy would remove financial exposure linked to a Judicial Review challenge including; abortive costs, legal fees, delay costs, costs of demolition and reinstatement, additional costs in relation to a revised planning application.