Rugby Borough Council is likely to face legal costs of over £100,000 after the Wolston Homes planning inspector ruled against it.
The planning row refers to Bloor Homes’ bid to build 80 homes on land near Wolston Priory, a Grade II* listed building.
Officers recommended the development go ahead - but the borough’s planning committee, made of councillors, voted against the plans.
After a planning inquiry last month a government inspector ruled against the council, adding that it had acted unreasonably during parts of the process, and would therefore be liable for legal costs.
A final figure has yet to be agreed, but a figure of £100,000 has been estimated by the council.
Graham Dudley, the planning inspector, said in his report that although officers had recommended it for approval, they had not made the public benefits of the development clear enough.
He stated: “Had this matter been clearly thought through by the planning authority there is a reasonable prospect that the application would have been approved, particularly given the planning history of the appeal site.”
Cllr Craig Humphrey, leader of Rugby Borough Council, said: “I warned when this application was first refused by the planning committee that their decision may have serious financial consequences. I am dismayed, but not surprised. We could now have around £100,000 less to spend on front-line services than we otherwise would have. “All the available case law evidence shows that planning committees must provide robust reasons for refusal. I hope the committee will reflect on this during their decision making in the future.”