R v Secretary of State for the Environment, ex parte Sutton London Borough Council and another

Boundary change vesting ownership of valuable property in enlarged borough C at expense of reduced borough S – Whether regulation providing for vesting cutting down statutory right of S to seek retransfer or compensation by process of arbitration – Principles of construction where subordinate legislator empowered to amend primary legislation By section 68 of the Local Government Act 1972 (now section 20 of the Local Government Act 1992) public bodies affected by an area alteration ordered by the Secretary of State for the Environment may reach agreements, inter alia, for the transfer or retention of property and other rights, such bodies being further directed to refer matters not agreed to an arbitrator who, if not agreed upon, shall be appointed by the Secretary of State. Section 67 of the 1972 Act empowered the Secretary of State, in the exercise of his boundary alteration powers, to make regulations providing, inter alia, for the transfer of property and further declared that any such regulation might amend or repeal any provision of an Act or charter. In 1976 the Secretary of State, acting under section 67, made the Local Government Area Changes Regulations (SI 1976 no 246) in which regulation 62(2) provided that where an area passed from one body to another there would be a like passing (by operation of law) of all rights and liabilities attaching to any property located in that area. By an order taking effect on April 1 1994 an area forming part of an industrial estate, where Sutton London Borough Council owned certain valuable freehold properties, was transferred from Sutton to Croydon. It was common ground that the effect of regulation 62(2) was to vest the ownership of those properties in Croydon. Following a refusal by Croydon to return the properties both boroughs applied to the Secretary of State for the appointment of an arbitrator under section 68 (3). The Secretary of State declined to act, having been advised that the effect of the 1976 regulation was to limit the agreement powers under section 68 to properties not affected by change of ownership. Croydon accepted this view. Sutton successfully applied for judicial review and the decision of the Secretary of State was quashed. Croydon appealed. Held The appeal was dismissed. The court acknowledged the difficulty of construing the 1976 regulations, in particular the purpose of para 12 which declared that the regulation was without prejudice to the agreement and arbitration provisions of section 68. However those provisions, as enacted in earlier statutes, had stood for many years and clearly sought a just result. If the draftsman of the regulations had intended to emasculate section 68 it would have easy for him to make that purpose plain. Furthermore (per Phillips LJ) a delegation to the executive of a power to amend primary legislation should be treated as exceptional and any doubts as to its exercise should be resolved by a restrictive approach: see McKiernon v Secretary of Sate for Social Security (1989-90) 2 Admin LR 133. Michael Barnes QC and Nicholas Taggart (instructed by Stonehams, of Croydon) appeared for Croydon London Borough Council; Alan Wilkie QC and Nigel Giffin (instructed by the solicitor to Sutton London Borough Council) appeared for Sutton; the Secretary of State for the Environment did not appear and was not represented.