A developer behind a new village in Aberdeenshire claimed “a gun was put to his head” to pay £8m towards transport improvements in the north east.
Lord Southesk, who is bringing more than 4,000 homes to Chapelton of Elsick near Newtonhill, said he agreed to the sum to secure planning permission.
However, he is now arguing that the way the sum was calculated is unlawful.
His father and landowner, the Duke of Fife, has now applied to reduce the contribution to £287,000.
It comes after the Scottish Government said the way transport contributions were calculated in Aberdeen City and Shire did not meet national policy and had to change.
Lord Southesk said civic leaders were aware all along that, should Scottish Ministers find the Strategic Transport Fund was not fit for purpose, EDC would withdraw from the arrangement.
Lord Southesk said: “We had a gun put to our heads. If we did not agree to the Strategic Transport Fund clause we would not get planning permission.
“We would assert that the policy is now unlawful.
“Fundamentally we are not opposed to the principle of the Strategic Transport Fund but what we are concerned with it the way that the contributions are calculated.”
The Scottish Government has ruled that the STF can only take contributions from a developer for improvements directly linked to their development.
The STF supports wider infrastructure projects designed to cope with the growing population in Aberdeen and Shire.
The £8m originally agreed was to help fund upgrades such as the Third Don Crossing and the Aberdeen Western Peripheral Route.
Council sources said it was not the case the fund was unlawful.
He added the figure achieved under a reworked policy would not differ greatly from the £8m but that more detail of how the sum was reached would be included.
One source said that the offer of £287,000 was “far from credible” given the impact of potentially 8,000 cars from Chapelton.
Lord Southesk said the revised offer reflected the impact of the new village on the wider road infrastructure.
He added that he was spending millions and millions on local transport improvements.
This included a park and choose scheme, a new bus service, a £1m roundabout between Chapelton and Newtonhill and a second major roundabout at Bourtreebush junction.
He added: “This whole thing has been an enormous distraction. We have generally had a good relationship with Aberdeenshire Council
“Without that good relationship we would have seen our first residents here today.
“We hope that this issue can be contained and not affect the good relationship we have with the council.”
Councillor Peter Argyle, chairman of the Aberdeen City ad Shire Strategic Development Planning Authority, which controls the transport fund, said: “We will be discussing this at full council on March 12 and I cannot comment on this issue fully until then.”