Planning Conditions -penalty non compliance?

They may force you to remove any structure not built in compliance at your expense.
 
+ Leo above. In simple terms, look on a Grant of Planning Permission as a Contract between you and the Council. The Council agrees to give you permission to build provided you comply with certain conditions. You agree to these conditions and start building.

If you fail to comply with a condition, then you break the Contract. A new Contract will be required but remember the Council do not have to enter into a new second contract with you.

As ONQ says, why don't you state what the impossible condition is?
 
Its only non-compliance if you can't get " the written satisfaction of the Area Engineer".

The key would be to convince the Engineer that the hardcore and gravel finish is acceptable and will not cause a hazzard on the main road.

In this "Recession" I'm not sure but there was a grant to tarmac lanes / roads. All the neighbours had to come together and apply or argue their case. Many lanes were fully tarmac this way. Its worth looking into.

A written agreement with the Engineer / Council is a Contract. How can you expect your Architect / Engineer to lie to the Council & your bank on your behalf?
Non-compliance should be avoided, as "not wanting to cut off neighbours" during the works to the lane is not a valid excuse for non-compliance.