Judicial Review from a Development Perspective

What is Judicial Review?

Judicial review is essentially a challenge made against a decision that has been taken by a public body or a body which exercises a public function. For the purposes of this article we will focus on a challenge against the decision of a planning authority to grant planning permission.

The challenge is made through the Courts and the role of the Court in such proceedings is not to remake the decision being challenged, or (except for the purpose of considering its lawfulness) to inquire into the merits of that decision, but to conduct a review of the process by which the decision was reached in order to determine whether that decision was vitiated by some flaw.

In Northern Ireland, a Judicial Review claim can be brought up to twelve weeks from the date that the grounds for the claim first arose. In the case of planning, that’s twelve weeks from the date of the grant of planning permission not twelve weeks from the committee meeting. Although the committee resolve to grant planning, planning isn’t actually granted by the planning authority until the printed planning permission is issued. This can often be several weeks, if not months, after the planning committee meeting and this can be further delayed where a developer’s contribution is to be secured as a condition to the planning permission or by way of a Planning Agreement under section 76 of The Planning Act (Northern Ireland) 2011.

Judicial Review from a Developer’s perspective

Judicial review applications in the context of planning decisions, can have a significant impact on development and the development industry. Once a Judicial Review challenge is lodged in respect of a planning permission, a developer will typically delay/postpone development of the site until such time as the application is settled, thereby at best, delaying the development, or worse, frustrating altogether the potential social and economic benefits arising from the development.

Whilst the number of Judicial Review claims taken remains low when compared against the number of overall planning applications, such claims are very expensive both in terms of time and monetary value for those involved.

By way of example of a local judicial review involving a planning decision, in the case of In the matter of an application by William Donnelly for leave to apply for judicial review [2020] NIQB 35 an application for leave to apply for judicial review failed on the basis that there was no arguable case. It is relevant in the planning context as it related to breaches of planning conditions and the factors to be taken into account by local authorities when deciding whether or not to issue an enforcement notice. The applicant was aggrieved at a local council’s decision not to issue an enforcement notice against Omagh Minerals Limited in relation to boreholes drilled without planning permission. Whilst the case was highly fact-specific, an interesting point to take away was the Court’s finding that the law in this field, in particular the Planning (Northern Ireland) Act 2011, “affords a margin of appreciation or latitude to the decision maker” when requiring it to take account of all material considerations before making a decision.

The judicial review brought by Colin Buick and others (2018 [NICA 26]) to challenge the decision to permit the construction of a waste management incinerator on the outskirts of Belfast ultimately turned on complex questions of constitutional law, with a decision having been taken by a Permanent Secretary in the absence of a minister, during the recent period of Stormont collapse. The noteworthy issue for developers is to be alive to this risk occurring again, in any period in the future where the Stormont institutions again find themselves stood down.

Well drafted contracts in relation to development transactions will provide for acquisition, commencement of construction and/or funding for the scheme conditional upon (i) planning, and (ii) the judicial review period in relation to such planning having expired. The contract will usually provide that in the event a judicial review challenge is brought in the twelve week period, the developer will wait until the judicial review proceedings have run their course. If the judicial review quashes the planning permission the contract falls away, if the planning is upheld, the developer proceeds. Eversheds Sutherland have extensive experience in negotiating these types of provisions particularly in the context of design and build schemes subject to planning of late.

Despite the above, it is often the case that parties do not want to delay with the purchase/sale and/or development until the twelve week period has expired. The stretching of timescales is a major contributing factor to increasing costs on development projects and can severely negatively impact a developer’s anticipated profit margins. In the event a judicial review challenge is successful and planning permission quashed, the developer will suffer significant losses given the drop in property value, the costs of aborting the planned works and/or perhaps removing works already initiated, as well as potential penalties under other third party agreements. It is for this reason that some developers will waive their rights under the legal documents to ‘sit tight’ until the judicial review period has passed and proceed with the benefit and comfort of a judicial review indemnity policy which covers many of the financial losses associated with a successful judicial review challenge.

Judicial review insurance is a growing trend amongst developers. A judicial review insurance policy seeks to cover the insured party (ie the developer) against the risk of a judicial review challenge being made during the relevant period and allows the developer to proceed with development upon planning permission being issued. Generally, such insurance policies provide cover against financial loss in the event a judicial review of the planning permission is successful and may also include cover for wasted building costs, professional teams’ fees and/or legal costs that a party might incur in defending a judicial review claim. The added security offered by such insurance allows for works to commence as soon as planning is issued rather than waiting on the judicial review period to expire. As with all insurance policies it is important to check the conditionality attached to the proposed cover and these will vary across schemes and should therefore be meticulously reviewed to determine if they are appropriate in the circumstances. Whilst title indemnity insurance goes someway in cushioning the financial loss to a developer in the context of a successful judicial review challenge, it doesn’t solve all the developers problems as they will ultimately be left with a site they cannot develop as originally planned.

How can Eversheds Sutherland help?

Seeking clear, professional guidance before and during the planning process can help ensure projects remain on course for completion while keeping developers free from the potentially costly burden attached to facing a judicial review process. Understanding the risks from the outset allows clients to minimise exposure to project delay, contingent cost accrual and in the event planning permission is issued for a scheme, judicial review challenges and planning enforcement.

Our expert team of lawyers help developer, landlord and tenant clients, identify shortcomings at the outset, and help them to meet their planning obligations thereby reducing judicial review risk. We offer practical advice to clients on how to improve planning application submissions and can link clients with independent experts to deal with discrete areas of concern. The positive benefits of getting it right are significant, the consequences of getting it wrong can be catastrophic to timely delivery of any project.

If you should wish to discuss any of the above or require assistance in relation to a development project please feel free to get in touch with a member of the team below.