Redrow Homes Ltd, R (on the Application of) v Knowsley Metropolitan Borough Council

Section 38(6) of the Highways Act 1980 is wide and unqualified. It permits an agreement allocating expenses of construction, maintenance or improvement after, as well as before, a road becomes a highway maintainable at public expense. That expression concerns the highway authority’s continuing public-law liability. It does not require the authority to fund every item itself. A developer may therefore be required to maintain the highway or contribute to future maintenance, while the authority remains liable if the developer defaults. Sections 44, 53 and 278 support that construction. The availability of the section 37 procedure, commercial bargaining concerns and the omission of section 38 from section 305(7) do not justify reading down the statutory language.

Redrow, a house builder, appealed from the Administrative Court, where Michael Fordham QC, sitting as a Deputy High Court Judge, held that a section 38 agreement could require payment of a sum referable to future highway maintenance. The decision is identified on the cover sheet as [2013] EWHC. Redrow was developing estate roads and sought their adoption as public highways. The Council would only enter into the proposed agreement if Redrow paid a £39,000 commuted sum for future street-light maintenance. The central issue was whether section 38(6) of the Highways Act 1980 permitted such a provision after the road became maintainable at public expense.

1. Disposition. The appeal was dismissed unanimously. The Council was awarded its appeal costs, summarily assessed at £23,000 including VAT.
2. Construction of section 38(6). The subsection is expressed in wide and unqualified terms. It permits provisions concerning the bearing of expenses of construction, maintenance or improvement. Nothing in its language imposes a temporal restriction limiting the agreement to the period before the road becomes a highway maintainable at public expense.
3. Meaning of public expense. The phrase describes the highway authority’s continuing public-law liability to maintain the highway. It does not dictate how that liability must be discharged. The authority may carry out the work itself, require the developer to do so, obtain payment from the developer, or use a combination of those arrangements. If the developer defaults, the authority remains liable.
4. Statutory context. Sections 44 and 278 of the Highways Act 1980 show that private maintenance and private contributions towards maintenance are compatible with a highway being maintainable at public expense. Sections 38(1) and 53 likewise show that future-maintenance payments may be agreed in connection with extinguishing a private maintenance liability. There was no rational basis for giving section 38(6) one meaning for section 38(1) agreements and another for section 38(3) agreements.
5. Remaining arguments. A developer cannot be compelled to enter into a section 38 agreement and may use the section 37 procedure if the proposed terms are commercially unacceptable. The possibility of an open-ended obligation concerning maintenance or improvement is a matter of commercial judgment and does not restrict the natural meaning of section 38(6). The omission of section 38 from section 305(7) casts no light on the subsection’s meaning. The earlier decision in In re Earl of Stamford and Warrington [1911] 1 Ch 648 arose under differently worded legislation, was to be approached with caution, and was not relied upon in reaching the conclusion.

1. Court of Appeal (Civil Division). The appeal was dismissed, and the Council’s costs were summarily assessed at £23,000 including VAT.
2. High Court, Queen’s Bench Division, Administrative Court. Michael Fordham QC, sitting as a Deputy High Court Judge, held that section 38(6) permitted a section 38 agreement to require payment referable to highway maintenance after adoption and granted a declaration to that effect. The decision is identified as [2013] EWHC.