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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> London Bus Services Ltd v Tramtrack Croydon Ltd [2006] EWHC 531 (Comm) (17 March 2006)
URL: http://www.bailii.org/ew/cases/EWHC/Comm/2006/531.html
Cite as: [2006] EWHC 531 (Comm)
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| LONDON BUS SERVICES LIMITED |
Claimant |
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| - and - |
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| TRAMTRACK CROYDON LIMITED |
Defendant |
____________________
Richard Wilmot-Smith QC and Sean Wilken (instructed by Messrs Ashurst) for the Defendant
Hearing dates: 16 and 17 January 2006
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Crown Copyright ©
- This action brought under the CPR Part 7 procedure concerns the tram system in Croydon. A dispute has arisen concerning the question upon whom, if anyone, the responsibility lies to deal with overcrowding. Since the tram system is operated by a private company, the Defendant, pursuant to a concession granted by London Regional Transport, the predecessor in title of the Claimant, the answer is to be found in the contract whereby the concession was granted. The relationship between the Claimant and the Defendant is essentially one of Regulator and Operator.
- The Croydon Tramlink reuses some pre-existing railway routes, but it is essentially a new light railway. It required public subsidy, but it was built and is now operated by a private sector concessionaire pursuant to a Private Finance Initiative which provided public subsidy in the construction phase only. This is one of the earlier Private Finance Initiatives. The concession granted was for ninety nine years which by the standards of such instruments is long. Subject to the funding provided in the construction phase, the agreement required the Defendant to maintain and operate the Tramlink in accordance with the terms of the agreement at its own risk and without recourse to London Regional Transport, Government or other public funds. For its part the Defendant has the exclusive right to the revenue stream generated by operation of the tram system. Pursuant to powers contained in the Greater London Authority Act 1999 the setting of fare levels is now the prerogative of the Mayor of London. However in exercising the task he is bound to act in accordance with parameters very similar to those which bound London Regional Transport in exercising the same function under the London Regional Transport Act 1984 as it stood when the concession was first granted. London Regional Transport acquired the power to grant the concession by means of amendments to that latter Act introduced by the London Regional Transport Act 1996.
- The Concession Agreement was first made on 21 November 1996 between London Regional Transport (the "Corporation") and the Defendant Tramtrack Croydon Limited (the "Concessionaire.") It is a substantial document consisting of 112 pages. It is accompanied by an even more substantial document running to 190 pages. This latter document is the Performance Specification for the purposes of the Concession Agreement of which it forms part. The Concession Agreement which now binds the parties is the "Amended and Restated Concession Agreement" dated 29 June 2000. The parties thereto are the same. This document is 141 pages long. It is common ground that the provisions governing the capacity of the system and creating such obligations as there may be concerning enhancement of the same are unchanged as between the two agreements. The Performance Specification is also unchanged. I cannot hope to reproduce here all of the provisions which are either said to be or may be relevant to the questions which I have to decide, but I shall set out those around which the argument mostly revolved.
- The reason for the amendment and restatement of the Concession Agreement was the proposed shift in transport functions from London Regional Transport to the Greater London Assembly as provided in the Greater London Authority Act 1999. The Claimant London Bus Services Limited has, as a result of a vesting order, inherited the rights and obligations of London Regional Transport under the Amended and Restated Concession Agreement. Whilst it may not for present purposes matter the statutory regime in the setting of which the Amended and Restated Concession Agreement operates is not the same as that in which the original Concession Agreement was to be viewed.
- I shall hereafter refer to the parties as "LBSL" and "TCL" respectively, to the former sometimes as "the Corporation" and as to the latter sometimes as "the Concessionaire" and to the Amended and Restated Concession Agreement as "the ARCA."
- The contractual scheme is concisely summarised in TCL's skeleton argument for the hearing as follows: -
- I must set out some of the key provisions. In considering these provisions it should always be remembered that words beginning with a capital letter either bear the meaning attributed to them in the Interpretation section of the ARCA or are Defined Terms the meaning whereof is to be found in a Glossary at the end of the Performance Specification. I shall begin with the Performance Specification.
- Under the rubric (a heading for convenience of reference only see ARCA clause 1.7) "CARDINAL REQUIREMENTS" paragraphs 2.1 and 2.2 of Section 1 provide: -
- Under the rubric "DESIGN" paragraphs 5.1 and 5.2 provide: -
- In Section 4 of the Performance Specification it is provided that the maximum service train length is to be 45 metres. The train length currently used is 30.2 metres, configured in three sections which might, because of their length, be described as two and a half tram cars. The design of the tram is such that train length could be increased to 43 metres by insertion of a fourth section. The design capacity of a three car unit is 242 passengers including and assuming 5 standees per square metre of standing space. The capacity of a four car unit would on the same basis be 360[1] passengers.
- Paragraph 1.1 of Section 5 provides: -
- High safety standards
- High reliability, minimum maintenance requirement and ease of repair
- Proven design and technology
- Low floor access
- Ease of cleaning
- Easy access to all doors
- Modern and attractive appearance
- Low weight
- Low environmental impact
- Meet access requirements for the disabled
- Critical to the dispute are paragraphs 3.11 and 3.12 of Section 5 of the Performance Specification. They provide: -
- I was told that the equivalent design parameter for trains used on the London Underground is that standing passengers should not exceed 6 per square metre. No one was prepared to hazard a guess as to the number of standing passengers per square metre typically encountered during the busiest times of the day on the busiest stretches of the busiest Underground lines.
- Section 9 of the Performance Specification contains Service Parameters, and provides that the Concessionaire shall ensure that the service provided continues to comply with the accommodation limits and standards defined in Sections 1 and 5 to which I have already referred. Minimum standards are set out for frequency of services on different sections of the route. The Concessionaire may provide a higher frequency than the minimum stipulated up to the upper limits specified. An upper limitation on trams in each hour per direction passing along critical sections of route is specified as follows: -
- Trams currently operate on three routes. Route 1 is Wimbledon to Elmers End via Church Street, West Croydon and Sandilands. Between Central Croydon, Church Street, West Croydon and Wellesey Road trams travel in only one direction around a clockwise loop. Trams on Route 2 travel from Beckenham Junction to Central Croydon and then around the loop before returning to Beckenham Junction. Trams on Route 3 begin at New Addington, proceed to Central Croydon and thence again around the loop before returning to New Addington. It follows from the foregoing that all services call at Church Street. All services also pass between East Croydon and Sandilands, in whichever direction it might be. That section of the track passes along Addiscombe Road. The maximum frequency of trams along that part of the route is a limitation imposed by the Highway Authority. Insofar as there may currently be overcrowding on the system at peak times, however overcrowding or peak time may be defined and as to which I have no analytical evidence, it is likely as I understand it to be occurring between Sandilands and East Croydon, East Croydon Station of course being a major railway interchange.
- I have already referred to the obligation cast upon the Concessionaire by clause 3.1 of the ARCA to develop, finance, construct, operate and maintain the Tramlink System according to the terms of the agreement which the Concessionaire, subject or as otherwise provided in the ARCA, is to do at its own risk and without recourse to the Corporation, Government or other public funds or guarantees. That obligation is reiterated in clause 19 which provides:-
- Clause 25 of the ARCA is important. It begins thus: -
- Returning to the ARCA, as has been seen clause 25.1 specifically envisages that the Service Levels, the parameters for the Service Levels and the Timetable may be varied by or with the consent of the Corporation from time to time. Sub-clauses 25.2 to 25.5 then provide: -
- Further provision for Change Orders during the Operations and Maintenance Phase is made by clause 28 as follows: -
- The financial consequences of the Corporation issuing a Change Order are spelled out in clause 33.1: -
- The Concessionaire may also with the Corporation's consent make a Change Order see clause 34 which it is unnecessary for me to set out here. Any such Change Order will be at the cost of the Concessionaire.
- I have already referred to the fact that, subject to the detailed provisions therein, the Corporation may terminate the agreement in the event of a material and serious failure by the Concessionaire to operate and maintain the Tramlink System in accordance with Part 5 of the ARCA see clause 64.1(c). Part 5 of the ARCA includes the express obligation in clause 19 to comply with Good Industry Practice and the Performance Specification. The detailed provision which is particularly relevant is that which refers to remedial action reasonably acceptable to the Corporation not being commenced within a period of ninety days, presumably running from service of a relevant notice.
- Finally, it should be noted that the ARCA has at clause 75 and Schedule 13 an elaborate provision for expert determination, arbitration and, if necessary, action in the High Court in the event of dispute.
- The Claimant's Particulars of Claim read, in part: -
- These propositions are very broadly expressed and, in the case of sub-paragraph (d), virtually meaningless other than as a statement of the obvious. The parties produced what was introduced as an Agreed List of Issues although by the end of the hearing I am not sure that the Defendant agreed that I could supply useful answers. That List of Issues reads: -
- The real question, as it seems to me, is whether the ARCA prescribes circumstances in which there is cast upon the Concessionaire an obligation to provide the 33% increase in passenger carrying capacity over and above that initially required by paragraph 1.2 of Section 9 and paragraph 3.11 of Section 5 of the Performance Specification, an ability to absorb which without Significant Changes was an inherent element in its obligation to design and build the system. It is not suggested that the system is incapable of being enhanced in that manner without Significant Changes. This question at least has the virtue of tying in the Concessionaire's alleged obligation with the terms of the contract. But the answer to the question is in my judgment clearly "no."
- Mr Bowdery QC for LBSL submitted that the trigger for such obligation as TCL is under is when standing passengers exceed 4 per square metre or 5 per square metre in the hour of greatest daily passenger demand in the morning and evening, although he could point to no contractual criteria by reference to which it could be determined whether such levels had been exceeded. He suggested that it would have to be determined by an expert. However I do not see how that can be done, since the expert would have no criteria against which to address the question, and it is not his function to fashion criteria upon which the parties have not agreed. The problem is illustrated by the following passage in the Third Witness Statement of Mr Hewitt who submitted evidence on behalf of LBSL: -
- The position becomes still more problematic when I take into account another of Mr Bowdery's submissions. He said that he did not suggest that a finding that there was overcrowding between, say Sandilands and East Croydon, would generate an obligation to increase capacity elsewhere in the system, but only in relation to that "pinch point." The obligation was, he suggested, to expand capacity to avoid overcrowding at that pinch point. There need not be an immediate increase in capacity across the system as a whole. The increase in capacity provided did not have to be of the order of 33%. It simply had to be sufficient to avoid overcrowding. I simply cannot reconcile this approach with the contractual provisions.
- In my judgment the fallacy in the approach of LBSL is that it attempts to spell out of what are essentially construction and design obligations parameters as to conditions actually encountered in service which must not on any account be exceeded. This is fallacious not just in terms of the shape of the contract but also having regard to the features of the London transport system which involves a mixture of rail, including underground railway, tram, bus, taxi, private car and walking. No Londoner is under the impression that purchase of a ticket gives to the purchaser the right to get on to the next train or bus which arrives at that stop. The requirement to build a system capable of being enhanced and the figures for passenger density are to be found in Parts I and III of the Performance Specification. Part I contains General and Safety matters. Part II is concerned with Pre-Operational Requirements. Part III deals with the construction of the system and its integral parts in five different sections, Sections 4 8 headed, respectively Construction and Track Work, Rolling Stock, Power Supplies, Command, Signalling and Control and Communications and finally, Section 8 Operations and Maintenance Centre and Depot. It is Part IV which is concerned with Operational matters and it is in Section 9 that one finds the Service Parameters. It is true that one also finds in that Section a requirement that the Concessionaire ensure that the service provided continues to comply with the accommodation limits and standards defined in Sections 1 and 5. However for the reasons which I have already set out it is impossible to elevate the accommodation limits to the same status as the Service Parameters because no criteria are agreed by reference to which compliance therewith is to be measured.
- The ARCA provides, at clause 25, an elaborate mechanism for bringing about changes to the Service Levels and the Timetable. Pursuant to clause 25.3 the Corporation may give notice to effect a Service Change or a Service Parameters Change. Furthermore the Corporation may pursuant to clause 28 issue instructions requiring a Specification Change and for completeness the Concessionaire may also, pursuant to clause 34, make a Change Order. Contractual machinery is thus provided to deal with problems such as overcrowding.
- Clause 25 draws a distinction between a Service Change and a Service Parameters Change. A proposal for a change within the parameters for the Service Levels set in the Performance Specification is a proposal for a Service Change. Service Levels are defined as including passenger carrying capacity and journey times, pattern and frequency of services. Clause 25.1 requires the Concessionaire to operate the system so as to comply with the parameters for the Service Levels set out in the Performance Specification. Since Service Levels include passenger carrying capacity as well as journey times, pattern and frequency of services, this must be a reference not just to the parameters in Section 9 of the Performance Specification but also the accommodation limits and standards as referred to in Sections 1 and 5. However paragraph 5.1 in Section 1 of the Performance Specification is on any view concerned with design. Paragraph 1 thereof provides the cardinal requirements expressed in a very broad manner. One is therefore brought back to paragraph 3.11 in Section 5. On any showing it provides for a minimum capacity per tram expressed in terms of both seats and standing places at the maximum described density. The question is whether it also imports a further obligation that passenger density shall never exceed 5 passengers per square metre. For the reasons I have already set out such a hopelessly uncommercial construction cannot possibly be intended. Once that absurd construction is ruled out it is impermissible to read in further language by way of qualification so as to give the reference to standing passengers some meaning over and above being a design criterion.
- I find in paragraph 5.1(e) of Section 1 of the Performance Specification further support for my view that paragraph 3.11 is concerned with design criteria. Paragraph 5.1(e) of Section 1 says that paragraphs 1.2 of Section 9 and 3.11 of Section 5 contain an initial requirement for passenger carrying capacity. That initial requirement can only sensibly be understood as being a minimum number of 242 passengers accommodated as set out in paragraph 3.11. In other words paragraph 3.11 is dealing with design capacity. It is not dealing with the consequences of passengers crowding onto trams so as to bring about overcrowding by reference to the design criteria.
- I note also that the 33% increase in passenger carrying capacity to which reference is made in paragraph 5.1(e) of Section 1 is not the same as the provision for expansion to which paragraph 3.12 of Section 5 refers. Paragraph 3.12 of Section 5 requires tram design which can accommodate a greater than 33% increase in passenger carrying capacity it is in fact 49%. However the capability to bring about a 33% increase in passenger carrying capacity of which paragraph 5.1(e) of Section 1 speaks is not simply expressed in terms of the capacity of the trams but also by reference to the number of journeys scheduled to pass East Croydon Station in both directions during the busiest hour of the week as set out in the table in paragraph 1.2 of Section 9. This is to my mind yet another pointer to the fact that the accommodation limits and standards defined in Section 1 and 5 to which reference is made in Section 9 are, so far as relevant, the design criteria set out in those two sections.
- I therefore conclude that measures intended to bring about an increase in passenger carrying capacity as envisaged by paragraph 5.1(e) of Section 1 of the Performance Specification would involve a change to or outside the parameters for the Service Levels set out in the Performance Specification. The contract makes provision for such a change, with differing consequences depending upon at whose initiative the change is brought about. This action is, as it seems to me, directed towards establishing that there are contractual criteria pursuant to which it can be demonstrated that TCL has an obligation to bring about such change irrespective of whether LBSL as Regulator gives notice to effect such a change. If that is the purpose of the action, it has failed. I would however point out that if the Regulator LBSL considers that it can demonstrate that the Concessionaire TCL is in material and serious breach of contract in failing to operate and maintain the Tramlink System in accordance with Part 5 of the ARCA which includes clauses 19(b) and 25.1(a), then it has its remedy under the termination provision clause 64.
- In the light of the foregoing I am not sure that it is really helpful to attempt to answer the questions contained in the Agreed List of Issues. I have I hope in the course of my judgment given some guidance as to how the contract is, in my view, to be understood. The answers which I can sensibly give to the Agreed List of Issues are as follows: -
- It follows that I cannot grant the declaratory relief sought. I could declare that the Defendant is obliged to implement capacity enhancements as and when required by the ARCA but it would be meaningless except as a statement of the obvious and unhelpful and I decline to do so. I have been anxious to give to the parties as much assistance as I can so that this exercise should not prove to have been completely fruitless. I have I hope made sufficiently clear how in my judgment the contract is to be approached and why the approach to it of LBSL is, in my judgment, flawed. I have I hope done enough to resolve the major difference in approach to this contract which has apparently prevented the parties from moving forward together to tackle such problem as may exist in relation to overcrowding.
Mr Justice Tomlinson:
"The Contractual Scheme
24. TCL was to design, construct and operate the tram system in Croydon (ARCA clause 3.1). In so doing, TCL had to comply with the Performance Specification (ARCA Clause 3.2).
25. There are two phases; first the construction phase (see ARCA clause 13), which is spent; second, the Operations Phase (see Part 5 of the ARCA) which has now 89 years to run, since it expired at midnight on 21st November 2095.
26. Clause 25 of the ARCA provides that TCL shall comply with the parameters for the Service Levels set out in the Performance Specification and in accordance with the Timetable.
27. Those service levels and the timetable can be changed pursuant to TCL's proposals (see clause 25.2) and pursuant [to] a Change Order made by LBSL (see clause 25.3). These Change Orders may lead to the payment of compensation to TCL (see clause 25.5).
28. Further, Change Orders can be instructed by LBSL (see clause 28) and, in those circumstances, paid for by LBSL (see clause 33). Where Change Orders are by TCL with LBSL's permission, those Change Orders are at TCL's own cost (clause 34).
29. The scheme therefore is that TCL runs trams of a certain capacity to a timetable specified by the Performance Specification. TCL receives revenue from various forms of travel passes (including Travelcards, Bus Passes, Concessionary Permits and Pre-paid Stored Value tickets), cash fares and compensation pursuant to complex formulae. It is not necessary to go into the detail of revenue receipt. It is enough to know that the more passengers the more revenue is received.
30. As stated above, the period of the agreement is 99 years (clause 7) unless terminated.
31. Termination can be pursuant to clauses 60 (LBSL default), 61 (Construction Phase Force Majeure, now irrelevant), 62 (Operations Phase Force Majeure) and 64 (Default of TCL). Clause 64 allows TCL's concession to be terminated if it fails to operate and maintain Tramlink in accordance with Part 5 of the ARCA and Part 5 sets out the obligations of TCL in the Operations Phase.
32. The system had to be designed and built to meet certain physical characteristics. Rolling stock is dealt with in Section 5 of the Performance Specification (D1 182). Fleet size and capacity is dealt with in Section 5 of the Performance Specification at clause 3.11 (D.1 197). The system had to perform to a minimum timetable and an upper limitation on trams in each hour clauses 1.2 and 1.4 of Section 9 with maximum journey times (Clause 1.5 of Section 9 of the Performance Specification).
The Performance Specification
"2.1 The Concessionaire will undertake the Project so as to comply with the detailed requirements of the Performance Specification. It shall also comply with and satisfy the cardinal requirements set out below:
(a) the Tramlink System shall be constructed and operated so that it is safe, reliable, efficient and environmentally friendly and accessible to all irrespective of mobility impairments, as far as is reasonably practicable;
(b) the Concessionaire shall take account of the need to react safely and quickly to emergencies in all aspects of its design and construction of the Tramlink System;
(c) once operating, the Tramlink System shall be capable of achieving the levels of service set out in Section 9 of this Performance Specification;
(d) the operation of the Tramlink System shall reflect a high standard of presentation and public image. The Tramlink System shall be operated efficiently with minimum disturbance to the public and minimum delay to passengers;
(e) the Tramlink System shall be designed, constructed, installed, commissioned, operated and maintained so as to satisfy all appropriate standards and codes as is consistent with Good Industry Practice.
(f) the Tramlink System shall comply with all relevant Laws and regulations in place at, or imposed after, the date of this agreement including, without limitation, the Railways and Other Transport Systems (Approval of Works, Plant and Equipment) Regulations 1994, the Railways (Safety Critical Works) Regulations 1994, the Management of Health and Safety at Work Regulations 1992, the Railways (Safety Case) Regulations 1994, the Construction (Design and Management) Regulations 1994, the Noise Insulation (Railways and Other Guided Transport Systems) Regulations 1996 and other relevant legislation.
2.2 The Tramlink System will operate as an integral part of the public transport network in Greater London. The Corporation is subject to a statutory duty to co-ordinate public transport services and their operations which includes the Tramlink System. The Concessionaire shall co-operate with the Corporation in this respect and shall comply with the Corporation's reasonable requirements in relation to ensuring co-ordination of public transport services in those areas affected by the Tramlink System."
" 5.1 The Concessionaire shall design the Tramlink System so that once built it satisfies all of the Performance Requirements and shall also comply with the following principles:
(a) to ensure that unless otherwise required by relevant standards, the design of the Tramlink System accommodates the reasonably predictable extremes of the local climatic conditions;
(b) the design and construction of the Tramlink System shall ensure that the appearance of both equipment and infrastructure is attractive and reduces visual intrusiveness as far as is reasonably practicable. The Tramlink System shall be landscaped in order to maintain the character of the areas through which it passes and to mitigate any adverse visual impact (some of which landscaping is to be done by the Council in accordance with the provisions of the Tramlink General Agreement);
(c) the vehicles operated on the Tramlink System are to be designed to a high modern standard in terms of passenger comfort and ride quality. In addition, the vehicles shall be configured using modular construction allowing components to be used which are well proven and reliable. The Concessionaire shall provide a safe, reliable, attractive, energy efficient and environmentally friendly vehicle;
(d) the Tramlink System is to be designed as an integrated system to provide the level of safety and reliability by this Performance Specification;
(e) The Tramlink System shall be capable, without the need to make Significant Changes to the fixed infrastructure, including the power supply and signalling system, of providing for a 33% increase in passengers carrying capacity above that initially required by paragraph 1.2 of Section 9 and paragraph 3.11 of Section 5 of this Performance Specification. The increase in passenger carrying capacity shall be calculated by applying 33% to the product of:
(i) the passenger carrying capacity (at 5pax/m²) of the largest type of Tram initially introduced to operate on the Tramlink System; and
(ii) the number of journeys that are scheduled to pass East Croydon Station in both directions during the busiest hour of the week as set out in the table in paragraph 1.2 of Section 9 of this Performance Specification.
This increase in passenger carrying capacity may be achieved either by operating more services (subject to the limits set out in paragraph 1.4 of Section 9 of this Performance Specification) and/or by employing longer Trams (subject to the limits set out in Section 5 of this Performance Specification).
5.2 The Tramlink System shall be designed, built and maintained, including the renewal of subsystems and components as necessary, to a standard that will ensure that it will be capable of continued operation for a period of at least forty years without the need for a Significant Change more frequently than once every five years."
"Tramlink System" means "the system of light rail transit to be designed, constructed and operated in certain parts of the London Boroughs of Merton, Sutton, Croydon and Bromley as described in this Performance Specification" and LBSL regards as significant the inclusion of the word "operated." "Performance Requirement" means a requirement in this Performance Specification." "Significant Change" means a change which would require the interruption of the Services for longer than one operating day.
"SECTION 5
ROLLING STOCK
1. GENERAL REQUIREMENTS
1.1 Design principles
The Concessionaire shall provide a sufficient number of Trams, to be not less than 21, to satisfy the service and maintenance requirements set out in Sections 9 and 11 of this Performance Specification. The Concessionaire shall ensure that the rolling stock provided for the Tramlink System complies with the following general design criteria:
And the specific requirements detailed below.
In the event that a change to the rolling stock has the effect of increasing the Swept Path in the highway, the Concessionaire shall not make such change without the approval of the Highway Authority.
The Concessionaire shall design, build and supply the Tram described in Appendix 5.1, in accordance with the requirements of this Section 5."
It is also provided in this Section that the Trams shall be capable of running together in multiple unit Trains for emergency operation only, i.e. one Tram recovering a failed Tram. Normal service Trains shall comprise one Tram of 30.2 metres length and 2.65 metres maximum width generally as shown on drawing number TC-95-3526 Issue C in Appendix 5.1 part 2 and shall not exceed the maximum length specified in Appendix D to Section 4. That maximum length is as I have already set out 45 metres. Minimum standards are spelled out for passenger access and accommodation.
"3.11 Fleet Size and Tram capacity
For the purposes of fleet size determination, at least 30% of the passengers shall be capable of being seated and standing passengers shall not exceed 4 pax/m² standing (except in the hour of greatest daily passenger demand in the morning and evening when up to 5 pax/m² will be acceptable).
In addition the Concessionaire shall ensure that:
(i) the maximum number of seats per Tram (including tip-up seats) shall be 74 and the total passenger capacity with 5 standees per metre shall be 242; and
(ii) the usable floor area for standees per Tram shall be not less than 33m².
The passenger area layout of the Tram shall be generally as shown on the Concessionaire's Drawing Ref. No. TC-95-3526 Issue C in Appendix 5.1 Part 2.
3.12 Future Expansion
The design of the Tram shall be such that an additional saloon section, together with power bogie, can be incorporated to make up a Tram of 43.3m in length, having a minimum seating capacity of 109 and a total capacity of 361 including 252 standees of 5 pax/m². This shall be generally as shown in the Concessionaire's drawing number TC-95-3527 Issue C in Appendix 5.1 Part 2."
"Section of Route Maxima (at any time)
Addiscombe Road, Croydon 26tph
Crossing Kingston Road, Merton Park 8tph."
I was told that the current relevant frequency of trams at these two points is 21tph and 6tph respectively.
THE AMENDED AND RESTATED CONCESSION AGREEMENT.
"PART 5
OPERATIONS PHASE
Operation and Maintenance in respect of the Service
19. The Operation and Maintenance Phase shall commence on the Actual Opening Date. The occurrence of the Actual Opening Date shall be determined in accordance with the Performance Specification. The Concessionaire shall in operating and maintaining or securing the operation and maintenance of the Tramlink System:
(a) comply with the terms of this agreement;
(b) comply with Good Industry Practice; and
(c) comply with the Performance Specification."
So far as relevant Good Industry Practice means "the exercise of that degree of skill, diligence, prudence, foresight and practice which would reasonably and ordinarily be expected from . (b) during the Operation and Maintenance Phase, a skilled and experienced operator of light rail systems for public transport use responsible for all aspects of operations and maintenance of a light rail system, over a period of 99 years, in each case engaged in the same undertaking as the Concessionaire."
"SERVICES AND SERVICE CHANGE
25.1 The Concessionaire shall operate the Tramlink System:
(a) so as to comply with the parameters for the Service Levels set out in the Performance Specification; and
(b) in accordance with the Timetable (which shall constitute a Public Timetable published for use by the public together with a Working Timetable (including scheduled non-passenger journeys)) made available to and approved by the Corporation in accordance with the Performance Specification,
in both cases, as varied by or with the consent of the Corporation from time to time."
Pausing there, it should be noted that Service Levels means "the level (including passenger carrying capacity and journey times) pattern and frequency of services." It is interesting to note that this definition does not speak in terms of numbers of passengers actually carried or the density of passengers standing at any given time. It speaks in terms of passenger carrying capacity. This is to my mind not surprising. The parameters for the Service Levels are set out in Section 9 of the Performance Specification which is concerned with operation of the Tramlink System. Where in that Section there is reference to accommodation limits and standards it is a reference back to Sections 1 and 5 which are, so far as relevant, concerned with passenger carrying design capacity. Section 5 of the Performance Specification requires the Concessionaire to provide a sufficient number of Trams, to be not less than 21, to satisfy the service and maintenance requirements set out in Sections 9 and 11 of the Performance Specification. Section 9 sets out service parameters. It is not suggested that TCL is failing on the score of frequency of service or journey times. However Section 9 provides that the Concessionaire must ensure that the service provided continues to comply with the accommodation limits and standards defined in Sections 1 and 5. Section 1 sets out the cardinal requirements and the design capability. Section 5 deals with Rolling Stock. The critical paragraph therein is paragraph 3.11, introduced by the words "for purposes of fleet size determination." There are then references to capacity. The total passenger capacity with 5 standees per square metre shall be 242. Given the provisions as to the minimum percentage of passengers who must be capable of being seated, and the minimum number of seats per tram, this obviously has an impact on the design, layout and size of the trams. I cannot read paragraph 3.11 as intended to secure the result that if at any time during service standing passengers exceed 5 per square metre then the Concessionaire is in breach of the agreement. This is a paragraph dealing with the number of trams required to comply with the requirements as to frequency and journey times and with capacity, not with conditions actually encountered in service. If it were intended to deal with conditions actually encountered in service, it would surely provide detailed criteria by reference to which it is to be determined whether or not the Concessionaire is in breach of contract. It cannot sensibly be intended that if on one or two occasions standing passengers can be shown to exceed a density of 5 per square metre then the Concessionaire is without more in breach of contract and/or obliged to provide enhancement to the system. The very absence of determinative criteria is to my mind conclusive that this paragraph is dealing with the planning and design stage, not providing a trigger mechanism for the imposition of an obligation to provide enhanced capacity.
"25.2 The Concessionaire may from time to time make written proposals to the Corporation for changes to the Service Levels and the Timetable.
(a) If the proposal is for a change within the parameters for the Service Levels set out in the Performance Specification (a Service Change), the Corporation shall not unreasonably withhold its consent to the same.
(b) If the proposal is for a change to or outside the parameters for the Service Levels set out in the Performance Specification ( a Service Parameters Change), the Concessionaire shall supply to the Corporation written reasons for its proposals, together with the anticipated effects of such proposals on matters such as the interest of passengers, the interest of the Concessionaire, the impact on adjacent modes of transport and on sales and use of Travelcard on the Tramlink System and adjacent modes of transport and the impact on anticipated levels of Off-Tram Revenue.
(c) In either case, the Corporation shall consider the proposal and notify the Concessionaire in writing whether the proposal is accepted or rejected and if the proposal is rejected, it shall supply reasons to the Concessionaire as to why the proposal is rejected. In the case of a Service Change, the Corporation shall provide such notification promptly to the Concessionaire but in any event shall respond within 28 days of receipt of any such proposal.
25.3 The Corporation may from time to time effect a Service Change or a Service Parameters Change by giving notice in writing to the Concessionaire and Concessionaire shall comply with any such Service Change or Service Parameters Change (and any consequential obligations to produce new Timetables) within the time specified in the notice. The Concessionaire shall not be obliged to comply with a Service Parameters Change if it demonstrates to the Corporation's reasonable satisfaction that compliance with such Service Parameters Change is not possible to achieve by reason of the physical layout of the highway network or the system of traffic priorities operating in the area in which the Tramlink System is located.
25.4 Prior to issuing a notice specifying a Service Parameters Change or a Service Change, the Corporation shall supply to the Concessionaire written reasons for its proposals, together with details of the anticipated effects of such proposals and shall consult with and take account of any representations made by the Concessionaire concerning the effect of the proposed Service Parameters Change or Service Change.
25.5 If as a result of a Service Parameters Change the Concessionaire would suffer or incur actual and verifiable arm's length increases in capital costs and/or actual and projected reductions in Net Operational Revenues it may submit a claim to the Corporation to be compensated by payment of an amount equal to such increases in capital costs (after taking into account any increase in Net Operational Revenues which will result) or actual or projected reductions in Net Operational Revenues. The claim shall be made no later than 28 days following the notification by the Corporation of the Service Parameters Change. The Corporation may request (and if requested the Concessionaire shall provide) an estimate of such amount from the Concessionaire prior to making the Service Parameters Change and as part of the consultation process under clause 25.4. The Concessionaire shall also make proposals as to the reasonable steps which it could take in order to minimise the increases in capital costs or actual or projected reductions in Net Operational Revenues which it would otherwise suffer or incur as a result of the Service Parameters Change and shall, if required by the Corporation, undertake such steps and any other mitigation measures which the Corporation may reasonably require after consultation with the Concessionaire, subject to the Corporation being obliged to reimburse the Concessionaire for the costs of such mitigation action (other than normal business overheads). The provisions of clause 46 shall also apply to the payment of compensation under this clause 25.5 as if such payment constituted the payment of a Compensation Amount under that clause."
"CHANGE ORDERS
28.1 The Corporation may
(b) during the Operations and Maintenance Phase, issue instructions requiring a Specification Change (referred to as a Specification Change Order) provided that, where standards and specifications are relevant to the subject matter of the Specification Change Order, following implementation of such Specification Change the Performance Specification will continue to apply standards and specifications that are equivalent to or higher than those applicable in the Performance Specification prior to implementation of the Specification Change.
28.2 All such Change Orders shall be in writing and the Concessionaire shall, subject as provided in clause 29.2 and 29.3 and to the Corporation obtaining (with the Concessionaire's co-operation and reasonable assistance) licences and consents required to undertake the Construction Change or Specification Change (as applicable), comply with any such Change Order."
"Payment
33.1 Payment for a Change Order under clause 28.1 shall be made by the Corporation:
.
(c) in the case of a Specification Change, on a fair and reasonable basis to be agreed between the parties by reference to the nature of the Specification Change and the timetable for its implementation."
"7 .. disputes have arisen between the parties as to whether on a proper construction of the Concession Agreement it is the Defendant and/or the Claimant who is responsible for the cost of providing for a 33% increase in passenger carrying capacity above that initially required.
8. In particular the Claimant seeks the assistance of the Court to resolve these disputes and the Claimant seeks declarations that on a proper construction of the Concession Agreement:
(a) the Defendant is obliged to provide for the implementation of capacity enhancement
(b) capacity enhancements include providing for a 33% increase in passenger carrying capacity above that initially required
(c) the Defendant has financial responsibility for such capacity enhancements
(d) the Defendant is obliged to implement such capacity enhancements as and when required by the Concession Agreement."
"1. On the proper construction of the Amended and Restated Concession Agreement:
(a) Is the Defendant obliged under the Amended and Restated Concession Agreement to implement capacity enhancements (including making provision for a 33% increase in passenger carrying capacity)?
(b) In any event, is the Defendant obliged to pay for or bear the costs of the implementation of such capacity enhancements?
(c) If the Defendant is obliged to implement capacity enhancements and/or pay for or bear the costs of them, then under what circumstances does that obligation arise?"
It is not possible to consider questions (a) and (b) without first addressing question (c), since unless the contract prescribes the circumstances in which the Concessionaire is obliged to implement capacity enhancements it is impossible to say that the Concessionaire either has or will have an obligation so to do.
"26. It is LBSL's case that the obligation arises when standing densities exceed 4 passengers per metre square or 5 during the busiest hour. Mr Davison states in paragraph 18 of his statement that the peak hour (the hour of greatest daily passenger demand in the morning and evening) is not uniquely defined. The point I think he is making is that it is not clear what the time period is over which the limit must be exceeded. It is possible that the trigger takes effect immediately when standing density exceeds the 4/5 parameters. However, in my view, a pragmatic approach ought to be taken so that TCL is not obliged to implement capacity enhancements if there is a one-off occurrence when ridership exceeds the capacity parameters. I would think that a reasonable period of time ought to be taken to assess ridership which, in my view, would be four weeks. This is the payment period under the concession and is also the period currently used by TfL for assessing whether TCL has complied with its obligation to run 98% of its timetabled operating kilometres and its obligation to achieve 95.5% of scheduled headways."
The suggestion that the trigger takes effect immediately when standing density exceeds the 4/5 parameters is impossible to accept because it is unclear what precisely that means and in any event the consequences are commercially absurd. Suppose the prescribed maximum standing density is exceeded one weekend because of a sporting event, or on a weekday because the buses are not running for whatever reason, or simply because one tram is unexpectedly delayed so that there are more waiting passengers than normal when it arrives at a given stop. The period of four weeks is arbitrary and not to be found in the contract. But in any event over what part of the system is ridership to be measured? Must the parameter simply be exceeded between two stops or must there be some percentage of journeys which are affected by "overcrowding."
"1. On the proper construction of the Amended and Restated Concession Agreement:
(a) Is the Defendant obliged under the Amended and Restated Concession Agreement to implement capacity enhancements (including making provision for a 33% increase in passenger carrying capacity)?
Answer: Yes, but only insofar as clauses 25.3 and/or 28.1(b) so require.
(b) In any event, is the Defendant obliged to pay for or bear the costs of the implementation of such capacity enhancements?
Answer: The financial consequences are spelled out in clauses 25.5 and/or 33 of the ARCA.
(c) If the Defendant is obliged to implement capacity enhancements and/or pay for or bear the costs of them, then under what circumstances does that obligation arise?
Answer: This question is redundant.
Note 1 I take this figure from TCLs tender document, to which I was referred at the hearing. No one has suggested that it is of any significance that this figure is one short of the 361 passengers to which reference is made in paragraph 3.12 of Section 5 of the Performance Specification to which reference is made below. [Back]