Landmark legal decision sets alarm bells ringing for developers
Precedent warning over
recent ruling on public highways case
07 | 09 | 11
A recent Court of Appeal decision
against a Welsh local authority regarding the right of
residents to compensation for property depreciation caused by
new roads built by private developers has significant
implications for UK property developers and highway authorities
says the lawyer representing the claimants.
The Court of Appeal decision in
Thomas & Others v. Bridgend County Borough Council [2011]
EWCA Civ 862 closes a loophole in the Land Compensation Act
1973. The claims made under Part 1 of the Land Compensation Act
concerned compensation for depreciation caused by noise and other
nuisance from the newly constructed Hendre Relief Road in Bridgend
South Wales.
The problem for the Claimants was
that the road, built by Redrow Homes, opened on 9th July 2002 but
the highway was not formally adopted until 29th June 2006, almost 4
years later. The claims were therefore effectively barred by
operation of Section 19(3) of the Land Compensation Act 1973 which
provides that claims cannot be made against a Highway Authority if
the highway does not become maintainable at public expense within
three years of opening.
The Court recognised that in such
cases a developer would benefit from its own delay in that the
delay in adoption beyond three years would operate to prevent the
Claimants’ claims for depreciation compensation for which the
developer would otherwise be liable pursuant to an indemnity to the
Highways Authority.
The Court of Appeal closed this
loophole by using powers under Section 3 of the Human Rights Act,
accepting that these powers were sufficiently wide to enable the
Court to re-interpret Section 19(3) of the Act. Handing down his
judgement, Lord Justice Carmworth described the operation of the
provision in current circumstances as "truly bizarre" and
recognised that the provision served to prejudice the diligent road
builder who completed the project on time but reward the
inefficient road builder who would be able to evade liability
altogether.
The lawyer representing the
claimants, Neil Stockdale of Hugh James Solicitors, says the
decision has set an important precedent and should be
noted by both developers highway authorities across the UK. “The
case obviously has significant implications for councils and
developers involved in the construction of public highway,
particularly in the context of previous litigation on the effects
of indemnities contained in the highways infrastructure
agreement. I would advise a review of their procedures in
this area if they don’t want to fall foul of this ruling in future”
He added “There are also wider implications in terms of the Court
of Appeal's approach to the rights enshrined in Article 1 and the
use of Section 3 of the Human Rights Act to interpret
legislation”.