Development of land for housing – Improvement of existing roads – Purchase of field to make roundabout – Developer entering into agreement with highway authority under section 278 of the Highways Act 1980 – Developer to pay part of purchase cost – Owner of field obtaining ransom compensation – Developer seeking declaration that section 278 agreement unenforceable – Judgment for plaintiff
In 1973 Kent County Council, Kent, produced an area plan for housing development near Maidstone. Wards Construction (Medway) Ltd, Wards, bought the largest part of the housing land. Planning permission was granted in 1982. Improvement of a junction between New Cut Road and Bearsted Road, where a roundabout was to be built, was necessary and in March 1982 Wards entered into a supplementary agreement under section 52 of the Town and Country Planning Act 1971. A condition of that agreement required Wards to enter into an agreement with Kent, as local highway authority, under section 278 of the Highways Act 1980 to ensure the road improvements. By clause 3(a)(ii) Wards were to pay 65% of the cost of widening the road and the roundabout and Kent the rest. Wards owned the land for the road widening but the 0.35 ha of the field needed for the roundabout was owned by B. B rejected an offer from Wards of £5,000 based on the agricultural or public open space value. After discussions, Kent made a compulsory purchase order for the 0.35 ha in January 1983 . B objected. In February 1983 the section 278 agreement between Wards and Kent was executed but was not referred to in any of the proceedings resulting from B’s appeal. B served a counternotice whereby Kent had to acquire the rest of the field. Compensation was assessed by the Lands Tribunal at £10,000 for the rest of the field and £2,150,000 for the actual order land of 0.35 ha being its ransom value.
In 1994 Wards brought an action against Kent claiming that clause 3(a)(ii) of the section 278 agreement was unenforceable on the grounds of illegality. In 1996 Kent claimed payment from Wards. The enforceability of the clause in both actions was heard as a preliminary issue. Wards contended that the Highways Act only authorised highway authorities to enter into agreements providing for contributions to the costs of executing highway works and not to the costs of acquiring land for such works, that the agreement had been entered into knowing that Kent could only acquire the land by CPO and that the making of such an order was prohibited by section 278(5) of the Act.
Held Judgment was given for the plaintiff.
As a matter of construction, it was legitimate to imply into a section 278 agreement the power to acquire land for the purposes of the agreement as well as to execute works on it when acquired. However, the exercise by Kent of their power under section 239 of the Act to make a compulsory purchase order for B’s land contrary to section 278(5), the fact that it had a clear intention to perform that part of the agreement by unlawful means, and at the time of the agreement (which was after the CPO had been made) an intention to break the law, rendered the agreement illegal in so far as it required Wards to pay any part of the costs of the acquisition.
Gerard Ryan QC and Rodney Stewart Smith (instructed by Kingsley Smith Co, of Chatham) appeared for the plaintiff; Malcolm Spence QC and Adrian Trevelyan Thomas (instructed by Sharpe Pritchard, London agents for the solicitor to Kent County Council) appeared for the defendants.
