Judicial Review Insurance
A judicial review indemnity policy provides cover for financial loss arising in the event of a judicial review of a planning or other decision of a public authority.
As a 'check and balance' against failings in administrative processes, the law allows for decisions made by a public body to be challenged. This includes decisions made by local planning authorities. Any person or group who may be adversely affected by a decision may ask the courts to examine the legality of that decision.
An application for judicial review has to be lodged within 6 weeks of the date that the decision under challenge was made (although the courts have discretion to extend the period). There is also a 6 weeks period for bringing an judicial review application against other government bodies decisions, such as a decision by the Secretary of State.
Judicial review insurance is relevant if you or your client intend to purchase property with the benefit of, or develop it in accordance with, planning permission granted or shortly to be granted without waiting for the period during which a judicial review of the planning permission may be claimed.
Why should the risk of judicial review be a concern?
Planning applications can be unpopular with the existing local community who may make strenuous efforts to try to prevent or delay the development if possible. A planning permission may create the potential for additional competition for an existing retailer or even a house builder who may seek to protect their existing advantage.
Judicial review represents an accessible and affordable option for those wishing to oppose a development. The judicial review process can frustrate the timescales of a development leading to increased costs and therefore reduced profit margins for a developer.
Since both planning law and the process involved in the local planning authority considering a planning application are complex, potentially significant risks arise that a planning decision may be challengeable by judicial review.
The initial costs in starting the process are very low to ensure that they do not exclude members of the public - the court fees are established by the Civil Proceedings Fees (Amendment) Order 2011.
Claims for judicial review are made in two stages:
The permission stage. This allows the court to filter cases by deciding which should be allowed to go to a full hearing. The permission stage is decided on the basis of a written claim. This stage involves a brief look at the case to decide whether there is an arguable case and whether the case has been brought promptly or if any delay can be justified.
The claimant must prepare all the papers at this stage. A court fee of £60 is payable. The judge will read the documents and will decide whether to grant permission for a full hearing.
Full hearing. The claimant must pay a further fee of £215 within 7 days of the decision to grant permission.
If permission is granted for a full hearing, significant delays can arise to enable court time to be allocated.
Whilst the reason for a successful judicial review may be remediable by addressing the failure in the process, the costs could become substantial and, when the correct process is followed and reports produced, the planning authority may be unable to re-grant planning consent. This could leave the developer owning a site that is not worth anywhere near as much as they paid for it and they could suffer wasted costs.
Why take out Judicial Review Indemnity Insurance?
If a judicial review challenge is upheld and your client's planning permission is quashed, they could suffer significant losses including loss in property value, abortive costs of works, delay costs, increased lending costs, penalties under agreements with third parties.
Planning decisions can be challenged by judicial review up to three months after the decision date and the Court has discretion to allow extensions.
Highly publicised judicial review challenges to local authority decisions have raised awareness that unwanted decisions can be challenged and as many as 50% of all judicial review applications are successful.
Judicial review insurance can assist in:
- Providing financial security and peace of mind
- Removing potential hurdles to obtaining funding
- Avoiding initial delays that could jeopardise the development
Benefits of judicial review insurance
A judicial review indemnity policy can provides protection against potential financial losses, including loss in property value, abortive costs of works, delay costs, increased lending costs, penalties under agreements with third parties.
Judicial review insurance can enable work to commence on site once planning is granted without having to wait until the expiry of the period during which a claim for judicial review can be made. It provides financial security against risk, enabling decisions to be made, time and money saved and delivery targets to be met. In addition, it provides reassurance to financial investors.
We are able to consider risk where the decision made by a public authority is otherwise than simply a planning decision. A public authority's decision to grant a liquor license or even compulsory purchase land are examples of decisions that could be challenged by judicial review and for which a judicial review indemnity policy may be available.