Councils lose Supreme Court battle with TfL over vesting of highway

Southwark Council and the City of London Corporation have lost a Supreme Court case with Transport for London over the vesting of highways.

The case of London Borough of Southwark and another v Transport for London [2018] UKSC 63 concerned the effect of the GLA Roads and Side Roads (Transfer of Property etc) Order 2000 (SI 2000/1552) (“the Transfer Order”) and the GLA Roads Designation Order 2000 (SI 2000/1117) (“the Designation Order”). [What follows is the Supreme Court’s press summary.]

By combined operation of those Orders, responsibility for Greater London Authority roads was transferred from individual London borough councils, including Southwark and City of London Corporation, as local highway authorities, to TfL.

The provision at the heart of the appeal was article 2(1)(a) of the Transfer Order, which provides for the transfer of “the highway, in so far as it is vested in the former highway authority”.

TfL and the councils convened a statutory arbitration before Mr John Males QC. The purpose was to determine exactly what specified property and liabilities transferred to TfL in relation to each highway.

The dispute between the parties was whether the automatic transfer of “the highway” under article 2(1)(a) of the Transfer Order carried with it:

1. only the zone of ordinary use (i.e. the road surface and the airspace and subsoil necessary for the operation, maintenance and repair of the road), or
2. the entire vertical plane (i.e. all the airspace above and the subsoil below the surface of the road), to the extent that the relevant council already owned it prior to the transfer date.

In the arbitration and at each stage on appeal, Southwark and City of London argued that the transfer was limited to the former, while TfL argued for the latter, wider approach.

The arbitrator broadly agreed with TfL’s case. The caveat was that particular layers or slices of subsoil and/or airspace that had acquired a separate identity by the transfer date could not be treated as parts of the highway and so did not pass to TfL.

On appeal to the High Court, Mr Justice Mann agreed with the arbitrator, recording a concession by counsel for TfL that its claim “related to land acquired for or appropriated to highway purposes”.

However, on further appeal, the Court of Appeal adopted a narrower position. It considered that the word “highway” in article 2(1)(a) of the Transfer Order must have been intended to carry the same meaning as it had at common law, and in relation to section 263 of the Highways Act 1980. Thus, the Court of Appeal held that only the zone of ordinary use had transferred to TfL.

The Supreme Court – comprising Lady Hale (President), Lord Reed (Deputy President), Lord Carnwath, Lord Lloyd-Jones and Lord Briggs – unanimously allowed TfL's appeal.

Lord Briggs, who gave the sole judgment of the Court, noted that the word “highway” had no single meaning in the law.

He said the default land law position, that the conveyance of freehold land automatically involves the transfer of the entire vertical plane, was not followed in successive statutory provisions dealing with automatic vesting of highway interests formerly in private ownership, as seen in the decision in Tunbridge Wells Corpn v Baird [1896] AC 434 (HL) (“the Baird principle”).

The Baird principle provides that such a transfer was limited to the road surface, the subsoil immediately beneath it and airspace sufficient to enable use and enjoyment by the public and maintenance by the highway authority.

The limits set by the Baird principle reflected concerns about expropriation of private property without compensation resulting from statutory vesting, Lord Briggs said.

It was, rightly, common ground that the Baird principle applied to section 263 of the 1980 Act, replicating section 226 of the Highways Act 1959, the Supreme Court judge said. However, section 265 of the 1980 Act and its predecessors made provision for the transfer of property and liabilities, as between successive highway authorities, of highways designated as trunk roads.

The first major property transfer scheme was undertaken in relation to newly designated trunk roads by section 7 of the Trunk Roads Act 1936 (“the 1936 Act”).

Despite differences in language, the substance of section 228 of the 1956 Act and section 265 of the 1980 were materially the same as section 7 of the 1936 Act, Lord Briggs said.

He noted that the extent of transfer of highway rights was complicated by the fact that local highway authorities often acquired property rights in relation to highways by means other than automatic vesting under section 263, such as compulsory purchase and acquisition by private treaty and, at times, for non-highway purposes.

Ownership of airspace above and subsoil below the zone of ordinary use may also be of substantial commercial or development value, particularly in urban areas like Central London.

Disagreeing with the Court of Appeal, the Supreme Court decided that the Baird principle did not apply to article 2 of the Transfer Order or to section 265 of the 1980 Act, upon which article 2 was modelled.

The words “[t]he highway, in so far as it is vested in the former highway authority” in article 2, properly construed, meant only that part of the vertical plane relating to a GLA road which was vested in the relevant council on the operative date, in its capacity as former highway authority, was transferred, Lord Briggs said.

The Supreme Court disagreed with the Court of Appeal’s reasoning that the word “highway”, used in article 2 and section 265, had a clear common law meaning – it was not a defined term and its meaning in this context was to be found through the almost identical wording of section 265 on trunk roads.

Given the different ancestry of, and purposes served by, section 263 and section 265 of the 1980 Act, the word “highway” used in both provisions cannot be given the same meaning, Lord Briggs said.

The phrase beginning with “in so far as” in section 265(1)(a) of the 1980 Act, and in article 2, imports the ownership capacity limitation.

Lord Briggs said the Supreme Court’s approach, like that of the arbitrator, largely avoided irrational types of multi-layering on the vertical plane in the sense of different highway authorities owning parts of the vertical plane in the same highway.

He added that expropriation concerns were not well-founded because, generally, the transfer of property from one highway authority to another was simply the quid pro quo for relief from responsibility for operation and maintenance.

Lastly, there was no presumption or burden of proof as to the extent of highway rights transferred, Lord Briggs said.

He added that this decision did not resolve any issues as to the ownership of the lateral plane of a highway.