I agree - if the amount the Council want is not too large it may be best to pay them. Otherwise it can get very complicated. Not only the solicitor, but the developer as well could be responsible. Also, what was the land used for before the house was built? Who sold it (or purported to sell it) to the developer? Was it (i.e. the area the Council claim to own) fenced off & included with the rest of the land? If so, for how long, as this could determine whether the then owner acquired it by adverse possession?
All these issues - & no doubt others - might need to be looked into.