The Ombudsman's final decision:
Summary: There was fault by the Borough Council in the way it failed to use its powers properly to ensure a new road on a housing estate was built to a standard the Highways Authority requires to adopt and maintain it at public expense. The Borough Council has suggested a possible remedy which is acceptable to the Ombudsman.
- Mr Y complains for Mr X and the residents of his estate. Mr Y complains the Council failed to use its powers properly to set up a bond with the developer under either the Advanced Payment Code or a section 38 agreement to ensure the road on Mr X’s housing estate was built to a standard the Highways Authority would adopt and maintain at public expense. Mr Y says the Council’s failure has left residents on the estate liable for the costs of bringing the road up to standard for adoption.
The Ombudsman’s role and powers
- The Ombudsman investigates complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. She must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, she may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1))
- The Ombudsman provides a free service, but must use public money carefully. She may decide not to start or continue with an investigation if she believes:
- the fault has not caused injustice to the person who complained, or
- she cannot achieve the outcome someone wants.
(Local Government Act 1974, section 24A(6))
- If the Ombudsman is satisfied with a council’s actions or proposed actions, she can complete her investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i))
How I considered this complaint
- I have considered the following:
- Mr Y’s complaint for Mr X to the Local Government Ombudsman
- The Council’s correspondence with Mr X and Mr Y
- The Council’s response to my enquiries.
What I found
- The Highways Act (the Act) at Sections 219 and 220 provides for owners of land on which new buildings are to be built to make payments to the relevant “street works authority”. This applies to new buildings where developers have to put in plans under the Building Regulations. These provisions are known as the Advance Payments Code (APC).
- The council acting as the building control authority must tell the highways authority within a week of building regulations approval it has passed the plans. Within six weeks of passing the plans the highways authority must serve a notice on the builder. This notice requires the builder, before beginning any building work, to pay to the highway authority, or secure through a bond, a sum of money to cover the cost of the street works.
- The APC is meant to ensure developers deposit enough money with the highway authority to cover the cost of making up the street to adoption standard. Its aim is to ensure house buyers do not have road charge liabilities under the Private Street Works Code if a developer defaults.
- Generally the County Council is the highway authority and relevant “street works authority”.
- The Act allows for exempt categories, one of which applies if a Section 38 agreement is made. Section 38 gives highways authorities the power to enter an agreement with the developer liable to maintain the highways on a development. It does not allow the authority to force a developer to enter an agreement. On agreement the developer deposits a bond for use should they default and fail to complete the highway works. When an agreement is made under S.38 the highway becomes maintainable at public expense.
The Highways Agreement between the County Council and the Borough Council
- The County Council made a Highways Agreement (the Agreement) with the Borough Council on 1 July 2003 under S.101 of the Local Government Act 1972 and Sections 2 and 19 of the Local Government Act 2000. This allowed the Borough Council to carry out the County Council’s Highway Authority role for three years.
- Under the Agreement the Borough Council agreed to ‘discharge the Relevant Functions in the relevant areas act in accordance with the policies, relevant codes of practice and appropriate standing orders of the County Council’.
- Under the Agreement the Borough Council adopted the functions of the “street works authority” and became responsible for ‘administration of the functions under the Advance Payments Code’. This included serving Section 220 notices under the Act.
- The Borough Council was the Building Regulation authority.
- The Borough Council granted planning permission on 13 June 2005 for the development. The Borough Council granted the developer permission to build three pairs of semi-detached houses and a two storey block of four apartments.
Mr X’s complaint
- Mr X bought a house on the housing development in August 2006. He says his solicitor told him there appeared “to be an agreement with the District Council for maintenance of the roads. We have requested a copy of this from the seller’s solicitor”.
- Mr X discovered after he had moved into his property there was no signed S.38 agreement and the highways authority had not adopted the estate road.
- Mr X and other residents complained to the Borough Council and County Council about the un-adopted road.
- Mr X could not progress the complaint with either the Borough Council or the County Council so he asked Mr Y to take his complaint forward in July 2014.
- Mr Y explored the circumstances and after some delay formally complained for Mr X to the Borough Council on 23 February 2015. Mr Y said:
- The Borough Council was guilty of maladministration because it had failed to exercise its powers to adopt the road on Mr X’s estate
- The Borough Council had failed to serve a S.220 on the developer within the prescribed timescale after it gave Building Regulations approval
- The Borough Council allowed the developer to start work on the development without an APC bond in place
- The Borough Council did not have a S.38 agreement in place with the developer and could not have one because he did not have full title to the land
- The Local Government Ombudsman had ruled in a similar case the road should be adopted at no expense to the resident because a S.220 should have been served as no S.38 was in place.
The Borough Council’s response to Mr X’s complaint
- The Borough Council responded to Mr Y’s complaint for Mr X on 23 February. It said:
- The location of the development site was unusual because it was within the Borough Council while the access roads were within another District Council’s area
- The District Council was negotiating the S.38 agreement
- When the Borough Council granted planning permission the County Council had served notice to end the Highways Agreement. This resulted in the handover of some matters to the County Council including the draft S.38 agreement
- The Borough Council could not find a copy of a S.220 notice served on the developer. However, it did not accept if it had not served a notice this resulted in any legal liability
- The Borough Council had considered the Local Government Ombudsman ruling but felt any case turned on their individual facts
- The Borough Council distinguished Mr X’s case because other issues were relevant such as, the residents’ solicitor’s searches, why the S.38 was not completed and the delay in bringing any complaint to the Ombudsman
- The Borough Council did not accept it was guilty of maladministration and would not pay the costs of the works to bring the estate road up to adoptable standard.
The Borough Council’s response to my enquiries
- The Council told me the County Council had given notice to end the Agreement under which the Borough Council had been carrying out the Advance Payments Code function. It said staff and records transferred to the County Council and this, coupled with the complaint being about events of 10 years ago made it difficult to provide full responses to my enquiries.
- The Council said it did not believe it had been at fault. It said there was no fault in the way it dealt with the planning applications. The Council said its Planning Department consulted both the County Council and the Engineering and Special Projects (ESP) team on the planning applications.
- The Council provided copies of the County Council’s and the ESP team’s response. It said it did not impose any conditions on the making up of the roads and neither consultee sought this.
- The Council explained the ESP team, as it is now called, was the section which completed work on Highways and Traffic matters under the Highways Agreement with the County Council. This included dealing with S.38 agreements and other matters about highways aspects of developments.
- The Council provided a copy of a memo sent by a Borough Council officer in October 2005 from the Building Regulations section reporting Building Regulations approval to the ESP team.
- The Council told me it did not have full information of what happened next “because of the complication and consequences of the notice to terminate the Highways Agency Agreement.” It told me it appeared no S.220 notice was served in response to the notification from the Building Regulations section.
- The Council said regardless of this, the ESP team was undertaking work for the County Council via the Agency Agreement, rather than for the Borough Council.
- The Borough Council said it did not accept the County Council’s statement that under the Highway Agreement the Borough Council agreed to carry out relevant functions, one being the ‘Administration of the functions under the Advance Payment Code’ which included serving S.220 Notices.
- The Borough Council told me it was acting as the agent of the County Council. It said the County Council was still the authority with the statutory responsibility. It argues “entering into an agreement with another body to carry out functions on its behalf does not relieve the first authority of liability or responsibility”.
- The Council speculates a S.220 may not have been put in place because officers involved at the time felt a S.38 agreement would be completed soon in 2006 and serving a S.220 was unnecessary.
- The Council told me by January 2006 the District Council was negotiating a S.38 agreement with the developer to make up the road. It said it had no further involvement in the matter but is aware the draft S.38 agreement was not completed.
- The Council told me it was anxious to conclude the matter for the residents. It said there was an opportunity for another developer to make up the road. He had offered to pay half the costs of making up the road with the residents between them being responsible for the other half.
- The Council told me it felt this was fair starting point. It said it would, “without prejudice”, in principle be willing to contribute towards the residents’ share of the costs. It added that it felt the County Council and the District Council should contribute because of their involvement in the matter.
- The Borough Council argues the Highway Agreement did not relieve the County Council of its liability or responsibility for Highway Authority functions and it was responsible for serving the S.220 notice. I do not accept this. There would be no point in putting in place such an agreement if the County Council kept responsibility, regardless of delegating its functions to the Borough Council.
- I believe the Highways Agreement between the County Council delegated “street works authority” to the Borough Council and this included responsibility for S.220 notices under the Advanced Payments Code.
- However, if I am wrong on this, the County Council could not serve a S.220 notice without being told of Building Regulations approval. The Borough Council has provided an internal memorandum showing there was Building Regulations approval and mentioning the Advanced Payments Code and Sections 220 and 221 of the Highways Act 1980. I have seen no evidence the Borough Council told the County Council it had given approval. This is fault.
- The Borough Council should have told the County Council of Building Regulation approval to allow it to serve a S.220 notice in the required six weeks time frame. Once it missed this time frame it lost the opportunity to serve the S.220.
- The Borough Council has suggested officers could have believed the S.38 agreement was in hand and it was unnecessary to serve a S.220 notice. However, a S.38 agreement is just that, an agreement. They are voluntary and both parties have to agree them. At any point a developer can walk away without making a S.38 agreement.
- The Ombudsman has already made clear in other decisions it is unlikely a completed S.38 agreement would ever be in place within six weeks of passing building control plans. This means a Highway Authority is effectively under a duty to serve S.220 notices in every case, unless one of the other exemptions in the legislation applies. The Borough Council has not suggested any other exemption applied. This is fault.
- Where the Ombudsman finds fault by a council, she must decide whether the fault causes an injustice to the individuals concerned. She must take account of all the relevant information available to her, including the purpose of the Council’s powers and what steps individual complainants might take to protect themselves.
- When they bought their homes, Mr X and other residents of the estate employed their own solicitors to protect their interests.
- We asked our lawyers what home buyers could expect from their solicitors. They say the average practitioner should do the following:
- check to see if planning conditions are discharged;
- check to see if there is a private road management scheme or section 38 agreement in place;
- if the section 38 agreement is not signed, check whether there is an APC bond or payment;
- if there is no section 38 agreement, APC bond or payment, the solicitor should secure a covenant with the seller requiring him to have the road adopted or withhold a sufficient sum to meet the client’s potential costs.
- To remedy this complaint the Borough Council should:
- Continue to negotiate an agreement with the new developer to provide funds to bring the estate road up to an adoptable standard;
- Negotiate with the residents about their share of the costs in bringing the estate road up to an adoptable standard;
- Meet with County Council and District Council representatives to see if it is possible to negotiate a joint response from them all to make the road up to an adoptable standard.
- I have completed my investigation. There was fault in the way the Council failed to use its powers properly to ensure a new road on a housing estate was built to a standard the Highways Authority requires to adopt and maintain it at public expense.
- The Borough Council has suggested a possible remedy to the complaint which is acceptable to the Ombudsman.
Investigator’s decision on behalf of the Ombudsman
Investigator's decision on behalf of the Ombudsman