Managing Judicial Review Risk in Development Deals

Charlotte Martin - Senior Underwriter 

In commercial real estate, we often focus heavily on title, due diligence, environmental risks, lease obligations, and market timing. The planning permission itself is usually seen as the gateway: once it’s “in the bag,” we move to agreements, financing, construction, and onward. But that assumption can be misguided. 

Judicial Review remains a discrete but high-value risk hanging over every new planning consent. From an underwriting perspective, it’s a risk we calibrate carefully, because when things go wrong, the costs are not theoretical: quashed consents, aborted works, damages, legal fees, refinancing costs, and value erosion all pile up. 

​​For commercial property solicitors advising developers, investors or lenders, being alert to this risk and knowing how to mitigate or insure it can make the difference between a smooth transaction and a headline catastrophe. 

What Judicial Review Does (and Doesn’t) Do 

One of the first things to get clear is that judicial review is not a merits appeal. The courts do not re-weigh planning merits (save in narrow circumstances).

​Instead, the focus is on lawfulness and process: 

• Did the local planning authority or Secretary of State act within their powers? 

• Did they follow proper procedural steps (consultation, publication, fairness, disclosure)? 

• Were material considerations properly deliberated or excluded? 

• Were there legitimate expectations, or was procedural unfairness or bias alleged? 

• Was the decision irrational (so perverse that no reasonable authority could have made it)? 

If a court holds that the decision was unlawful, the consent may be quashed. That has real consequences: the development may be stopped, partially built works may have to be undone, and value may plummet. 

A recent illustrative case (Greenfields v Isle of Wight Council) shows precisely how procedural oversights can lead to quashing. In that case, the failure to publish a Section 106 agreement led the court to void planning consent. It demonstrates vividly how the risk is not confined to dramatic planning oversights; it often lies in the small procedural steps that counsel might assume are safe. 

Timing is also key. The window to submit a planning related judicial review challenge is limited to six weeks in England, and developers tend to delay commencement until that window lapses. But for commercial clients this waiting period comes at a cost: holding interest, cost inflation, and disruption of tight project schedules. 

Judicial Review Risks in Transactions 

If you are advising developers, investors, or lenders, judicial review risk intersects with several advisory strands: 

1. Deal Structuring and Conditionality 

Your acquisition or development agreements should explicitly allocate risk around judicial review. Common approaches include:  

• Making drawdown, acquisition, or construction conditional on the expiry of the challenge period or absence of a challenge. 

• Including “sit, wait and see” or “snap back” mechanisms so that, if the consent is quashed, parties can unwind or re-negotiate. 

• Apportioning responsibility for professional fees, abortive costs or claims from third parties if planning consent is lost. 

Some clients, especially those with tight schedules, will resist delay, and may prefer to commence works early, so long as there is insurance in place. 

2. Due Diligence and Risk Spotting 

Before permission is obtained or as a condition precedent, you should run a “judicial review audit”. This may align with what your planning colleagues or quantity surveyors do. Key checks include: 

• Ensuring that all documents; planning officer reports, committee minutes, viability statements, S106 drafts are properly published and disclosed. 

• Verifying that all material consultees were consulted and responses considered. 

• Checking that any S106 / planning agreement drafts have been transparent, and that their terms and obligations are properly reflected in the planning decision. 

• Evaluating whether there are arguable points of bias, or whether there have been undisclosed concessions or changes. 

• Assessing whether local policies, National Planning Policy Framework guidance, neighbour objections, or third-party rights give arguable grounds for challenge. 

3. Advising on Insurance 

This is where your role and ours (as underwriters) overlap. Having a well-drafted legal indemnity insurance structure can unlock value for your clients and their transaction or financing. 

From an underwriting perspective, Judicial Review legal indemnity insurance is increasingly accepted as a useful tool to give developers confidence to begin works earlier. Some features covered include: 

• Defence costs and legal fees in defending a challenge. 

• Wasted professional and works costs (abortive expenditures) if permission is quashed. 

• Loss in land or development value (difference between “with consent” and “without”) if no substitute permission can be secured. 

• Delay costs (interest, holding costs) while litigation runs its course. 

• Potential claims by third parties if works must be undone or altered. 

But clients must review carefully since exclusions, sub-limits, trigger events, and timing clauses can vary markedly. Underwriters will scrutinize the planning history, local authority patterns, the strength of consultation, and whether there are red-flag objections. 

You’ll already be familiar with how important it is to ensure the transaction terms and the cover work smoothly together. In practice, that can include: 

• Ensuring the indemnity policy obligations (reporting, cooperation) do not impede defence. 

• Ensuring that the indemnity dovetails with your client’s contractual rights (so there is no gap in responsibility). 

• Checking that “snap-back” or unwind mechanics remain coherent if indemnity is triggered. 

In short: legal indemnity insurance should be treated as a strategic tool, not just a safety net.

Framing the Value Proposition 

From a solicitor's perspective, being able to propose a solution that allows a client to start works earlier, with legal indemnity risks transferred to an insurance policy, is compelling. It can shorten cash flow cycles, reduce interest and inflation exposure, and help secure funding certainty. 

From Legal & Contingency’s point of view, when solicitors present well-structured deals and transparent risk analysis, we can underwrite more confidently and often more competitively. A project that properly accounts for the judicial review risk is one we’re happier to support. 

In practice, that means your client benefits in three ways: 

1. Deal certainty and resilience — having indemnity cover means that a challenge does not turn into total disaster. 

2. Enhanced negotiating power — you can propose earlier drawdowns or commencement, backed by financial security. 

3. Stronger risk allocation — your agreements and indemnities align so that responsibility for risk is clear, and gaps are minimised. 

Don’t Treat JR as an Afterthought 

In commercial property, we often treat judicial review risk like a low-probability worry - a “contest if someone objects” scenario. But time and again it has been demonstrated that even a procedural slip can be fatal to planning consents, especially in contested or high-value schemes. 

As commercial property solicitors, you are ideally placed to embed risk-aware drafting, through careful due diligence, and coordination with underwriters. If you can combine that with intelligent indemnities that respond effectively in the event of a claim, you turn judicial review from a lurking threat into a manageable risk. 

If you’d like to talk through how Legal & Contingency approaches judicial review underwriting, or co-design risk allocation language for your development agreements, we’d be happy to work with you or your team.