Opponents of plans to turn a historic Bath hospital into a hotel say justice is "only for the rich" after they were told a legal challenge could cost £20,000.

Bath Campaigns members allege Bath and North East Somerset Council's decision to approve Fragrance Group's scheme was against its own policies and wrong in law – a claim the authority refutes.

The campaigners say they were told a judicial review could succeed but the court costs mean it is out of reach.

They are backed by film director Ken Loach, who warned that decisions like that on the Royal Mineral Water Hospital put Bath on the "same dangerous path" as Liverpool, which last month lost its World Heritage Status.

A spokesperson for Bath Campaigns said: "We firmly believe that this development not only goes against the council's own policies, but is wrong in law.

"However, to contest this requires a judicial review.

"And, as always, justice is only available to the rich. We have taken advice that a challenge is potentially winnable, but with court costs likely running to at least £20,000 (and being liable for the developer's costs if we lose) this is not something we are able to pursue, whereas the developer has unlimited funds to counter any court action.

"We will continue to build on this campaign and demand that the council serves the wider interests of residents – there is certainly no shortage of issues to argue against."

The spokesperson said the Min's redevelopment into a 160-bed luxury hotel would provide more hotel rooms Bath does not need, cost the city a green space despite the council declaring a climate emergency, and "sacrifice the needs of local residents to the wants of multinational corporations".

Planning committee chair Sue Craig spoke out to criticise Bath Campaigns and others for bullying behaviour against councillors and staff in recent months.

But Mr Loach, the director of films such as I, Daniel Blake who lives locally, said city planners and "ruthless profiteers" the Fragrance Group were the real bullies.

He said: "We desperately need councillors who are not mesmerised by wealthy developers, but who recognise that the special quality of this city is the unity of its buildings.

"More and more modern additions destroy that. Liverpool has lost its UNESCO World Heritage Site for this same reason.

"Decisions like the one at the Min take Bath down the same dangerous path."

Councillor Tim Ball, the cabinet member for planning, said: "The council followed full and proper procedures in determining this planning application.

"The application was considered having regard to statutory due process and all representations and objections made by residents and other third parties were fully considered. The application was fully scrutinised in a public forum, the planning committee.

"The council is satisfied that there is no evidence of a breach of the code of conduct by the councillors concerned or any failure by the council to follow the correct process in determining the planning application, and there is no evidence to the contrary provided."

He said the council makes all planning decisions based on planning law and policy and residents have extensive opportunities to have their voices heard.

The Fragrance Group declined to comment.