Heathrow Airport Limited v Office of Rail and Road

Citation: [2017] EWHC 1290 (Admin)

Judgment was handed down on 26 May 2017 by Mr Justice Ouseley in a case relating to the application of UK regulations implementing an EU Directive on track access charges to the Heathrow spur (the Railways Infrastructure (Access and Management) Regulations 2005). He rejected a challenge brought by Heathrow Airport Limited (‘HAL’) to a decision of the Office of Rail and Road (‘ORR’) that HAL could only recover from the operator of the proposed Crossrail service (or other services) to Heathrow the direct additional costs caused by the use of the spur rather than the historical long term costs of the spur.  Transport for London (‘TfL’) was an interested party in the case as it will run the Crossrail service (via MTR Corporation (Crossrail) Ltd) and will bear the cost of the access charges. The Department for Transport (‘DfT’) was also an interested party as co-sponsor (with TfL) of the Crossrail project.

The case turned on the rationality of ORR’s decision that HAL’s proposed access charges fell outside the scope of an exception in the regulations to the standard rule that only direct costs could be recovered. The exception only applied if the project could not otherwise have been undertaken without the prospect of recovering higher charges based on the long term historic costs of the project. Mr Justice Ouseley held that it was open to the ORR to conclude that the spur could still have been built without the prospect of recovering the long term costs and that the exception did not apply. There was an alternative source of funding for the long term costs (the Heathrow Regulatory Asset Base) and the evidence revealed the strategic importance of the spur to the expansion of the airport.

Mr Justice Ouseley also found that HAL would be unjustly enriched if they were able to levy higher access charges given that their financial contribution to the Crossrail project had previously been calculated on the basis of an assumption that only direct costs would be recovered. The Judge concluded that even if he had found the ORR decision to be irrational, he would have exercised his discretion against quashing it for this reason.

HAL also sought a declaration that the regulations do not apply at all on the basis that the spur was a “network intended only for the operation of urban or suburban passenger services”. The ORR had decided in 2013 that the regulations applied to the spur and Ouseley J declined to decide this issue on the basis of the hardship and prejudice caused by HAL’s undue delay in making the argument, the prospect that an earlier challenge would have led to a different outcome to the Crossrail contribution and the fact that the claim was academic given that HAL had committed to complying with the regulations.

Marc Rowlands QC and Simon Taylor acted for TfL.

Counsel

Marc Rowlands QC
Simon Taylor

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