Section 38 of Highways Act 1980 allows for the adoption of a road by a Highway Authority and for such a road to be maintained at the public expense. Highway Authorities often enter into an agreement with a developer for this purpose, and also to ensure that the new highway is built to an acceptable standard.
Until the recent Court of Appeal decision in Redrow Homes Ltd v Knowlsey Metropolitan Borough Council [2015] 1 WLR, 386, which can be read here, it was widely accepted that the developers' liability ceased at the point of adoption. However, the practice of seeking capitalised Commuted Maintenance Payments for the future costs of maintenance of key items, such as traffic signals and street lighting, was also common practice amongst some Highway Authorities.
The consequences of the decision is that although the authority would be primarily liable for maintenance costs post-adoption, it clarified that there is nothing to prevent the local authority from imposing an obligation on developers to pay towards future maintenance costs including by way of payment of Commuted Maintenance Sum, in this case for the maintenance of street lighting, which could be substantial.
