Development of land for housing – Improvement of existing roads – Developer entering into agreement with highway authority under section 278 of the Highways Act 1980 – Compulsory purchase of land to build roundabout – Whether council permitted to receive contribution from developer towards acquisition costs of land – Whether use of compulsory purchase to acquire land permitted – Judge granting declaration that section 278 agreement unenforceable – Appeal allowed
In 1973 Kent County Council produced an informal area action plan relating to a large area north-east of Maidstone known as the Weavering Street Development Area. Under the plan, more than 1,750 houses were to be built in an area known as Grove Green, and the road network was to be improved. Among other highway improvements, the plan recognised that the junction where New Cut Road joined Bearsted Road would have to be improved. Under section 278 of the Highways Act 1980, the planning authority and highway authority (the council) and the plaintiff developer entered into an agreement whereby the developer would pay 65% and the highway authority 35% of the costs of acquiring the land and building a roundabout.
At that time it appeared that the cost of acquiring the land would be approximately £10,000. In the event, the land was acquired by compulsory purchase and the roundabout was built in October 1991. Subsequently, the Lands Tribunal fixed the compensation payable by the council at £2.15m, and the Court of Appeal dismissed the developer’s appeal against that determination. On 30 December 1994 the developer commenced proceedings against the council claiming that the agreement to pay 65% of the costs of acquisition and building the roundabout was illegal and unenforceable, alternatively damages for negligence for not using reasonable care and skill in acquiring the land at minimum cost. The judge held that although the agreement was enforceable as a matter of administrative law, it was unenforceable because, under the law of contract, it had been illegally performed. The council appealed.
Held The appeal was allowed.
1. Since the overriding principle was that a section 278 agreement was to benefit the public rather than the developer, it must have been parliament’s intention that when a developer benefited the contribution should, in certain circumstances, be based on the total costs of the works, including acquisition costs. Accordingly, the council had been entitled under section 278 to obtain a contribution from the developer for costs incurred in acquiring the land.
2. Section 278(5) of the Act had not prevented the council from making a compulsory purchase order. The need to acquire the land had not depended on the existence of the section 278 agreement, and, accordingly, section 278(5) had not been breached. Therefore, the developer was bound by the agreement
Malcolm Spence QC and Thomas Lowe (instructed by Sharpe Pritchard) appeared for the appellants; Gerard Ryan QC and Rodney Stewart Smith (instructed by Kingsley Smith & Co, of Chatham) appeared for the respondent.
Thomas Elliott, barrister
