London Borough of Southwark & Anor v Transport for London [2018] UKSC 63

Transport for London disputed with London borough councils over what property transferred when highways were redesignated as GLA roads. The Supreme Court held that 'highway' in the Transfer Order included all property vested in the former authority in its capacity as highway authority, not merely the surface zone.

Facts

The Greater London Authority Act 1999 reorganised London government and created Transport for London (TfL). Pursuant to the GLA Roads and Side Roads (Transfer of Property etc) Order 2000 (the Transfer Order), property and liabilities relating to highways designated as GLA roads were transferred from the relevant London borough councils (here the London Borough of Southwark and the City of London Corporation) to TfL. Article 2(1)(a) of the Transfer Order provided for transfer to TfL of ‘the highway, in so far as it is vested in the former highway authority’. The drafting was modelled on section 265 of the Highways Act 1980, which deals with transfers when a highway becomes a trunk road.

A dispute arose, raised as a preliminary issue in arbitration before Mr John Male QC, as to what was captured by the words ‘the highway’ in article 2(1)(a). Specifically, the question was whether this transferred to TfL the entirety of the vertical plane (all subsoil below and airspace above the road) owned by the former authority, or only the so-called ‘zone of ordinary use’ — the surface plus such subsoil and airspace as is necessary for the operation, maintenance and repair of the highway (the ‘Baird principle’, derived from Tunbridge Wells Corpn v Baird [1896] AC 434). The arbitrator and Mann J broadly accepted TfL’s wider construction; the Court of Appeal preferred the Councils’ narrower interpretation. TfL appealed to the Supreme Court.

Issues

The central issue was whether article 2(1)(a) of the Transfer Order (and the materially identical section 265(1)(a) of the Highways Act 1980) was governed by the Baird principle, so as to limit the property transferred to the zone of ordinary use, or whether it transferred the entirety of the rights in the vertical plane vested in the former highway authority.

Arguments

TfL (Appellant)

TfL contended that the purpose of the Transfer Order was to place TfL in the shoes of the former highway authority. Whatever part of the vertical plane was owned by the Councils on the operative date passed to TfL under article 2(1)(a). On reflection, Mr Morshead QC accepted that this might properly be qualified so as to capture only those rights vested in the council in its capacity as highway authority. TfL further submitted that there should be a presumption that rights vested in the former authority were so vested in its capacity as highway authority, with the burden on the Councils to prove otherwise.

The Councils (Respondents)

The Councils argued that the Baird principle applied to article 2 just as to section 263 and section 265, because ‘highway’ had a settled meaning limited to the zone of ordinary use. A wider construction would expropriate valuable property, particularly in central London, without compensation. They also relied on section 266A of the Highways Act 1980 and on dicta of Mr Lewison QC in Secretary of State v Baylis (Gloucester) Ltd (2000) 80 P & CR 324.

Judgment

The Supreme Court (Lord Briggs giving the lead judgment, with whom Lady Hale, Lord Reed, Lord Carnwath and Lord Lloyd-Jones agreed) allowed TfL’s appeal.

Lord Briggs held that article 2(1)(a) transfers to TfL all rights in the vertical plane of a GLA road that were vested in the former council, but only to the extent that those rights were held by the council in its capacity as former highway authority. That, he held, was the true meaning of the words ‘the highway, in so far as it is vested in the former highway authority’.

The reasoning may be summarised as follows:

Meaning of ‘highway’

The word ‘highway’ has no single meaning at common law or in the legislation. Section 328 of the 1980 Act provides only a circular and context-sensitive explanation. While sections 263 and 265 of the 1980 Act sit side by side, they have different ancestries and serve different purposes. Section 263 (and its predecessors) effects a form of expropriation of private property and is rightly limited by the Baird principle to the zone of ordinary use. Section 265, by contrast, transfers rights already held by one public highway authority to its successor and contains no equivalent rationale for restriction.

The Baird principle does not apply to section 265 or article 2

The Baird principle was developed to limit the automatic vesting effected by statutes such as section 149 of the Public Health Act 1875 because such vesting was a form of uncompensated expropriation of private rights. There is no analogous reason to limit transfers between successive public highway authorities. The proper limitation is that the transferred rights must have been held by the former authority in its capacity as such.

Construction of ‘in so far as it is vested in the former highway authority’

Lord Briggs held that those words are to be read as meaning vested in the former highway authority in its capacity as such. On the Councils’ construction the qualifying words would be redundant, since the zone of ordinary use is always vested in the highway authority by section 263.

Consequences

Lord Briggs identified four consequences (para 29): (i) rights held by the Council qua adjoining owner do not pass; (ii) rights originally acquired or appropriated for non-highway purposes by the operative date do not pass, even if undeveloped; (iii) rights acquired for highway purposes (e.g. by compulsory purchase) do pass even if extending beyond the zone of ordinary use, unless appropriated to a non-highway use; (iv) these consequences flow from construction, not merely concession.

Multi-layering

The Councils’ construction would, irrationally, split the vertical plane between two successive public highway authorities. Layering between public authorities and private owners, or between different public bodies with distinct statutory functions, may be rational; but layering arising solely from a transfer of highway functions between successive highway authorities is not.

Section 266A

Lord Briggs declined to express a final view but suggested that on the reverse transfer under section 266A, rights in the vertical plane may pass as ‘land’ under section 266A(4)(a). Section 266A is in any event later in time and is not the model used for article 2.

The Baylis case

Lord Briggs respectfully disagreed with the obiter description by Mr Lewison QC of trunking as transferring only the ‘top two spits’, insofar as it suggested section 265 is governed by the Baird principle.

Expropriation

Lord Briggs rejected the expropriation analogy: the transfer of property is the quid pro quo for relief from the burden of operation, maintenance and repair. Whether the value of the transferred property exceeds that burden is variable and cannot drive construction.

Burden of proof

The court rejected TfL’s submission for a presumption in its favour. Determining in what capacity rights were held is a fact-sensitive task, not aided by any presumption.

Implications

The decision clarifies that statutory transfers of property between successive public highway authorities under section 265 of the Highways Act 1980 and article 2 of the Transfer Order are not constrained by the Baird principle. The principle remains firmly embedded in section 263 (automatic vesting on dedication or first becoming a maintainable highway), but does not control transfers between authorities that already hold proprietary rights.

For TfL and the London boroughs, the practical effect is that on designation of a GLA road, TfL succeeds to all rights in the vertical plane held by the former local highway authority in its capacity as such, including any subsoil or airspace beyond the zone of ordinary use that was originally acquired or appropriated for highway purposes. Rights held in another capacity (such as adjoining owner ad medium filum, or for non-highway purposes such as sewerage or underground railways) do not pass.

The judgment recognises that determining the capacity in which property is held is a fact-intensive exercise; no presumption operates in favour of either party. The decision has potentially significant economic consequences in central London, where airspace and subsoil along major roads can have substantial development value.

The court expressly declined to determine issues relating to the lateral plane, or the precise effect of section 266A, both of which remain open. The judgment also reaffirms the general principle, drawing on Farrell v Alexander and Goodes v East Sussex County Council, that highways legislation is built on centuries of accumulated law and often cannot be construed without reference to that history; and that the same word, even within a consolidating statute, may carry different meanings in different contexts according to the purposes served.

Verdict: Appeal allowed. Article 2(1)(a) of the GLA Roads and Side Roads (Transfer of Property etc) Order 2000 transfers to Transport for London all rights in the vertical plane of a GLA road that were vested in the former local highway authority in its capacity as highway authority, and is not limited by the Baird principle to the zone of ordinary use. The precise form of order on the preliminary issues was to be settled following further submissions.

Source: London Borough of Southwark & Anor v Transport for London [2018] UKSC 63