Section 38 of the Highways Act 1980 is the usual means by which highway authorities agree with a developer to adopt a road; that is the point at which the road becomes maintainable at the public expense. The traditional understanding had been that the highway authority agrees that provided the road is constructed to a pre-agreed standard by the developer, it will accept the adoption, with the highway authority then becoming responsible for its future maintenance. However, the High Court (see article) and subsequently the Court of Appeal have found to the contrary. The recent judgment now means that Section 38 Agreements might lawfully contain a provision for a commuted sum to cover all aspects of future maintenance of the highway into the indefinite future. They can also lawfully provide that the developer should itself pay for, or even carry out, all aspects of future maintenance whenever they become necessary.
The Developer, Redrow Homes, ("Redrow") was granted outline planning permission on 7 February 2011 to carry out a development of 525 dwellings at Huyton near Liverpool. As part of the Section 38 Agreement for the estate roads within the development, Knowsley Metropolitan Council ("the Council") required a provision that Redrow pay a commuted sum of £39,000 towards the future maintenance of street lighting after the adoption of the road. Redrow argued that no such provision could lawfully be included in a Section 38 Agreement.
The Court of Appeal disagreed with Redrow's arguments holding that Section 38 is expressed in "wide and unqualified terms" and there is nothing in the language which draws a distinction between what is permitted before and what is permitted after the road becomes a highway maintainable at the public expense. Whilst the Court accepted that the phrase "maintainable at the public expense" may connote that the highway authority would be legally responsible as a matter of public law to maintain the highway, it did not indicate how the authority was required to discharge the liability. The authority might choose to pay for the maintenance of the highway out of public funds or obtain funds for doing so from the developer or a combination of the two. Whichever course was chosen, the highway continued to be maintainable at the public expense and the highway authority remained liable. Parliament had not intended to preclude the possibility of an agreement for maintenance by a developer after the decision of a highway.
Implications - So where does this leave us?
In the light of ever tightening public sector budgets this decision gives the go-ahead to highway authorities to revise their road adoption policies and to seek future maintenance payments as part of the adoption process. Any commuted sums requested by highway authorities must be reasonable and justified. Additionally, developers and landowners may wish to engage with highways authorities as early as possible to determine whether there are likely to be future maintenance costs in order to factor this into their budgets.
Read the full judgment here:http://www.bailii.org/ew/cases/EWCA/Civ/2014/1433.html