QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| NETWORK RAIL INFRASTRUCTURE LIMITED
|- and -
|CONARKEN GROUP LIMITED
|NETWORK RAIL INFRASTRUCTURE LIMITED
|- and -
|FARRELL TRANSPORT LIMITED
Andrew Prynne QC and James Purnell (instructed by Greenwoods) for both Defendants
Hearing dates: 28-30 June and 6 July 2010
Crown Copyright ©
Mr Justice Akenhead:
"6. Are the Claimant's Schedule 8 losses recoverable, as being directly consequent on physical damage or do they represent pure economic loss?
7. Are the Claimant's Schedule 8 losses not reasonably foreseeable, or alternatively too remote as falling outside the scope of any duty owed by the Defendants' drivers to the Claimant in tort?
8. Do the incidents sound not only in negligence but also in trespass and/or nuisance and, if so, is the measure of damages recoverable by the Claimant any different from the negligence measure?"
It was, at one stage, argued that payments made to the TOCs by Network Rail in relation to the incidents might be construed as "penalties" but that argument has been abandoned by the Defendants. There also remain issues relating to interest on any damages to be awarded to Network Rail.
The Statutory Background
"(1) The Secretary of State and the Regulator shall each have a duty to exercise the functions assigned or transferred to him under or by virtue of this Part in the manner which he considers best calculated—
(a) to protect the interests of users of railway services;
(b) to promote the use of the railway network in Great Britain for the carriage of passengers and goods, and the development of that railway network, to the greatest extent that he considers economically practicable;
(c) to promote efficiency and economy on the part of persons providing railway services;
(d) to promote competition in the provision of railway services;
(e) to promote measures designed to facilitate the making by passengers of journeys which involve use of the services of more than one passenger service operator;
(f) to impose on the operators of railway services the minimum restrictions which are consistent with the performance of his functions under this Part;
(g) to enable persons providing railway services to plan the future of their businesses with a reasonable degree of assurance."
The Contractual Framework
"1.2.1 to use the track comprised in the Routes…for the provision of the Services using the Specified Equipment;
1.2.2 to make Ancillary Movements…
and to the extent reasonably necessary to give a full effect to the permissions in Clauses 1.2.1, 1.2.2 and 1.2.3 subject to Clause 1.3:
1.2.4 for the Train Operator and its Associates to enter on that part of the Network comprising the Routes, with or without vehicles; and
1.2.5 for the Train Operator and its Associates to bring things onto that part of the Network comprising the Routes and keep them there…"
By Clause 3, Railtrack granted the Train Operator permission to use the Routes.
"6.1 Operation and Maintenance of Trains
6.1.1 The Train Operator shall ensure that the Specified Equipment is maintained and operated to a standard which will permit provision of the Services in accordance with the Working Timetable…
6.2 Track Charges
Each of the parties shall perform its obligations set out in Schedule 7.
6.3 Operation and Maintenance of the Network
6.3.1 Railtrack shall ensure that adequate and suitably qualified personnel are engaged in the operation and maintenance of that part of the Network comprising the Routes.
6.3.2 Railtrack shall ensure that the Network is maintained and operated to a standard which shall permit the provision of the Services using the Specified Equipment in accordance with the Working Timetable and the making of Ancillary Movements…
Each of the parties shall perform its obligations set out in Schedule 4"
"8.3 Liability for Late Trains
Save as provided in Schedule 4 and Schedule 8, the parties shall not be entitled as between themselves to any compensation in respect of any damage, losses, claims, proceedings, demands, liabilities, costs, damages, orders and out of pocket expenses arising from cancellations, interruptions or delays to trains.
8.5 Exclusion of Claims for Consequential Loss
Neither party to this Agreement may recover from the other party any loss of revenue (including fare revenue, subsidy, access charges, Track Charges and incentive payments) or other consequential loss in connection with the subject matter of this Agreement caused to it by the other party, save to the extent otherwise provided in this Agreement or any other agreement between them."
"(a) Subject to paragraph 6.3 and 12.2, in respect of any and all Performance Sums for which Network Rail and the Train Operator are liable in any period, the aggregate liabilities of Network Rail and the Train Operator shall be set off against each other. The balance shall be payable by Network Rail or the Train Operator, as the case may be, within 35 days after the end of the Period to which the payment relates.
(b) Subject to paragraph 6.3 and 12.2, and save as otherwise provided, all other sums payable under this Schedule 8 shall be paid within 35 days after the end of the Period in which such payment relates."
"One of the elements of the payment between Railtrack and the TOC is the Marginal Revenue Effect of unscheduled delay on the farebox of the operator. In this way Railtrack compensates the operator for passenger revenue that the TOC is deemed to have lost from unreliability caused by Railtrack and is rewarded by the TOC for any improvement in the farebox which is deemed to arise as a result of its improved root reliability….
MREs should reflect the amount of revenue generated/lost as a result of a reduction/increase in minutes lateness on that service group. The MRE will therefore be affected by the type of traveller and the way in which he/she responds to changes in generalised journey time and the way in which he/she responds to unscheduled delay as opposed to additional planned journey time, the overall length of the journey and the yield to the TOC of that passenger journey." (Paragraph 2.5 12 July 2000)
The Law in relation to Negligence
"14. A duty of care such as the valuer owes does not however exist in the abstract. A plaintiff who sues for breach of a duty imposed by the law (whether in contract or tort or under statute) must do more than prove that the defendant has failed to comply. He must show that the duty was owed to him and that it was a duty in respect of the kind of loss which he has suffered. Both of these requirements are illustrated by Caparo Industries Plc. v. Dickman  2 AC 605. The auditors' failure to use reasonable care in auditing the company's statutory accounts was a breach of their duty of care. But they were not liable to an outside take-over bidder because the duty was not owed to him. Nor were they liable to shareholders who had bought more shares in reliance on the accounts because, although they were owed a duty of care, it was in their capacity as members of the company and not in the capacity (which they shared with everyone else) of potential buyers of its shares. Accordingly, the duty which they were owed was not in respect of loss which they might suffer by buying its shares. As Lord Bridge of Harwich said, at p. 627:
"It is never sufficient to ask simply whether A owes B a duty of care. It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless."
In the present case, there is no dispute that the duty was owed to the lenders. The real question in this case is the kind of loss in respect of which the duty was owed.
15. How is the scope of the duty determined? In the case of a statutory duty, the question is answered by deducing the purpose of the duty from the language and context of the statute: Gorris v. Scott (1874) L.R. 9 Ex. 125. In the case of tort, it will similarly depend upon the purpose of the rule imposing the duty. Most of the judgments in the Caparo case are occupied in examining the Companies Act 1985 to ascertain the purpose of the auditor's duty to take care that the statutory accounts comply with the Act. In the case of an implied contractual duty, the nature and extent of the liability is defined by the term which the law implies. As in the case of any implied term, the process is one of construction of the agreement as a whole in its commercial setting. The contractual duty to provide a valuation and the known purpose of that valuation compel the conclusion that the contract includes a duty of care. The scope of the duty, in the sense of the consequences for which the valuer is responsible, is that which the law regards as best giving effect to the express obligations assumed by the valuer: neither cutting them down so that the lender obtains less than he was reasonably entitled to expect, nor extending them so as to impose on the valuer a liability greater than he could reasonably have thought he was undertaking."
"…It is well settled that when a defendant by his negligence causes physical damage to the person or property of the plaintiff, in such circumstances that the plaintiff is entitled to compensation for the physical damage, then he can claim, in addition, for economic loss consequent on it. Thus a plaintiff who suffers personal injuries recovers his loss of earnings; and a shipowner, whose ship is sunk or damaged, recovers for his loss of freight. If and in so far as [Counsel for the plaintiff] is entitled to claim for the material damage, then he can claim for the loss of production which was truly consequential on the material damage…" (pages 341G-342A)
[Counsel for the Defendant] said that British Celanese Ltd v AH Hunt (Capacitors) Ltd  1 WLR 959 was wrongly decided. In that case the defendants collected on their premises long strips of metal foil. They negligently failed to keep them safe, and they were carried on the wind on to an electricity sub station owned by the electricity board, thus causing a power failure over a wide area. The defendants ought reasonably to have foreseen this, because it had happened before and they had been warned about it. The plaintiffs were the owners of a nearby factory who suffered physical damage to their materials by the cutting off of the current. They were injured indirectly and not directly. The indirect injury could reasonably be foreseen. Lawton J. held that the defendants were under a duty of care to the factory owners and were liable for the material damage and the loss of profit consequent thereon. I think that Lawton J. was right. I cannot accept [Counsel's] proposition. The distinction between "direct" and "indirect" has been attempted before, but it has proved illusory…" (page 343A-C)
I put on one side, therefore, the distinction between direct and indirect, and ask myself simply: Did the contractors owe a duty of care to the factory owners? I think it plain that they did. They were working near an electric cable which they knew supplied current to all the factory owners in the neighbourhood. They knew that, if they damaged the cable, the current would be cut off and damage would be suffered to the factory owners. Those simple facts put them under a duty to take care not to injure the cable: and this was a duty which they owed to all the factory owners in the vicinity. It comes straight within the principle laid down by Lord Atkin in Donoghue v Stevenson  AC 562, 580. Applying that case, I hold that the contractors are liable for all the material damage done to the factory owners and any loss of profit consequent thereon…" (page 343 E-G)
I must not be taken, however as saying that economic loss is always too remote. There are some exceptional cases when it is the immediate consequence of the negligence and is recoverable accordingly…" (page 345H)
"At bottom I think the question of recovering economic loss is one of policy. Whenever the courts draw a line to mark out the bounds of duty, they do it as a matter of policy so as to limit the responsibility of the defendant. Whenever the courts set bounds to the damages recoverable-saying that they are, or are not, too remote-they do it as a matter of policy so as to limit the liability of the defendant" (page 36C)
"The more I think about these cases, the more difficult I find to put each into its proper pigeonhole. Sometimes I say: "There was no duty." In others I say: "The damage was too remote." So much so that I think the time has come to discard those tests which proved so elusive. It seems to me better to consider the particular relationship in hand, and see whether or not, as a matter of policy, economic loss should be recoverable, or not." (page 37 C-D)
He then went on anything to look at various policy considerations which he considered applied the fifth of which was:
"…that the law provides for deserving cases. If the defendant is guilty of negligence which cuts off the electricity supply and causes physical damage to personal property, that physical damage can be recovered…and also any economic loss truly consequential on the material damage …Such cases will be comparatively few they will be readily capable of proof and will be easily checked. They should be and are admitted." (page 39B-D)
"I therefore conclude that the appellants should be held liable to the respondent, not in respect of the whole economic loss suffered by him, but only in respect of the physical damage caused to his stock of lobsters, and of course any financial loss suffered by the respondent in consequence of that physical damage."
"The loss of rent arising out of the damage to the building was consequential upon the damage: it was not pure economic loss."
He went on to deal with another argument:
"Finally, [Counsel] suggested that, although the defendant could reasonably be expected to foresee that the showroom was being put to commercial use and that accordingly he might have to compensate the tenant for loss of profits whose computation would include any rent which the tenant might have to pay during the period of repair, the defendant could not have been expected to foresee the effects of clause 6(3), this being an unusual clause in a lease. Therefore, he said, the loss to the plaintiffs lay beyond the limits of reasonable foreseeability and was too remote to be recovered. In my judgement however, this suggestion falls foul of the principal stated by Lord Reid in Hughes v Lord Advocate  AC 837, at p845, that a negligent defendant "can only escape liability if the damage can be regarded as differing in kind from what was foreseeable". Thus, it is clear that the defendant could not be expected to foresee the precise terms of the lease, but he could reasonably be expected to foresee that his negligence would cause physical damage and consequential financial loss to the owner or tenant of the premises. That was enough, in my judgement, to make him liable in damages to which ever of those parties, under the contractual arrangements between them, in fact suffered from the particular loss to which damages are claimed."
"…the damage to the train and SRA passengers, the resulting claim by SRA on RailCorp and payment in respect of the claim by RailCorp to SRA, were consequent on damage to the track caused by the faulty work of Alpcross. Prior to that work being done, the relevant part of the track was in a state such that trains could safely pass over it. The work was not done because the track was defective but because it was desired that the GIJs be replaced. After the work was done however the track was unsafe for trains to travel over it. In physical terms, the track was…buckled and displaced laterally. These physical defects in the track were negligently caused by Alpcross which became, prior to the derailment, liable in tort for the cost of repair of the track. Before the damage was repaired (or indeed detected) that damage to the rail caused the train to derail, with consequent economic loss being suffered by RailCorp. RailCorp's loss constituted by its payment to SRA was not, therefore, "pure" economic loss, but was loss consequent upon negligent damage to RailCorp's own property. As a result, ordinary principles of remoteness of damage are applicable to determine its recoverability from Alpcross and the principles as to recovery of "pure" economic loss (see  above) are inapplicable. It has not been contended that in these circumstances the loss is not recoverable."
The facts are not wholly on all fours with the present case because the sum paid by Railcorp to the SRA was for material damage to the derailed train and injuries to passengers.
"137. These authorities [Obestain Inc v National Mineral Development Corporation (The Sanix Ace)  1 Lloyds Rep 465 and HSBC Rail (UK) Ltd v Network Rail Infrastructure Ltd  1 WLR 643] do indeed show that a legal owner can usually recover the value of damaged or lost goods, but they do not assist on the question whether a beneficial owner of personal or real property can sue for damages for loss of use. It is clear that the legal owner can do so provided the loss of use is reasonably foreseeable; it is clear that the beneficial owner can sue if he joins the legal owner. The fact that the loss of use has accrued to the beneficial owner should make no difference to recoverability once the legal owner has been made a party to the suit.
We…would be prepared to hold that a duty of care is owed to a beneficial owner of property (just as much as to a legal owner of property) by a defendant, such as Total, who can reasonably foresee that his negligent actions will damage that property. If, therefore, such property is, in breach of duty, damaged by the defendant, that defendant will be liable not merely for the physical loss of that property but also for the foreseeable consequences of that loss, such as the extra expenditure to which the beneficial owner is put or the loss of profit which he incurs."
"(i) The collision caused the plaintiff's train services to be significantly delayed.
(ii) Pursuant to its Franchise Agreement with the Director of Public Transport, the plaintiff is required to pay Operational Performance Penalties when its services are delayed. A copy of the Franchise Agreement can be inspected at the office of the plaintiff's solicitors by appointment.
(iii) As a result of the collision the plaintiff paid the Director of Public Transport $7,000.77 in Operational Performance Penalties…."
"94 Seeking to draw support from this decision, counsel for the appellant suggested that the category of 'loss of business income', is analogous to the kind of loss in this case, namely 'loss of revenue' relating to the Franchise Agreement.
95 It is not always easy to discern the basis upon which the breadth of the relevant category is determined in the individual case. It does appear, however, that in the ordinary case a broad categorisation of the kind or genus of the loss will be appropriate…The adoption of a broad categorisation is consistent with the principle that it should not be necessary that the exact course of events which produced the injury was predictable or likely so long as the injury was foreseeable…
96 It is important to bear in mind that the appropriate categorisation of the loss in a given case will be, in essence, a question of policy. In a case which involves an uncommon kind of damage, it may be useful to narrow the category of damage beyond simply 'economic loss' or 'physical injury', so as to require that the tribunal of fact be given the opportunity to consider its reasonable foreseeability.
97 In the present case, the narrow category chosen by the learned Magistrate is not appropriate as the loss alleged to have been suffered by Metrolink is not that which is of an unusual kind. I observe that much has been made by the respondent before this Court, and before the judge below, of the complexity of the Franchise Agreement. In the modern world, however, complexity of contracts, and the provision of items such as key performance indicators and other performance targets, could hardly be said to be unusual.
98 There is nothing unusual about the expectation that Metrolink would receive remuneration for the operation of its part of the tram network or that it would lose revenue in the event that it could not operate a part of its service. There is no reason of policy that compels a different approach to the recovery of losses calculated by reference to targeted performance obligations which have not been met because of the inability to conduct the service, and losses arising from the same cause which are to be calculated under a different remuneration structure. That this remuneration might be reduced or increased depending upon the operator's ability to provide the service is unremarkable. That the mechanism by which remuneration for this service is determined might be complex, and be calculated according to a number of key performance indicators, is similarly neither unusual, nor is its complexity a reason to treat it differently from a more simple form of remuneration. For this very reason, the respondent was compelled to concede that it was reasonably foreseeable that fares would be lost as a consequence of interruption to the operation. For liability to be dependent upon foreseeability of 'a reduction in benefit' or the 'imposition of a penalty', is to lose sight of the fact that these are contractual mechanisms which are part of the manner in which the overall remuneration for the provision of the service is calculated. To require foresight of this is to require what was described in Hughes as foresight of 'the concatenation of the circumstances which caused the loss' or as in Cambridge Credits, as 'the precise manner of its occurrence'.
99 For these reasons I conclude that the learned Magistrate erred in defining too narrowly the kind or genus of the loss suffered by Metrolink. The appropriate categorisation was simply one which required foreseeability of 'revenue lost as a result of the inability to operate the tram service'…
103 I consider in the present case, that it is in no way 'far-fetched' that the collision of a car with a tram, causing an inability to operate trams on the network, might result in a loss of revenue. It is in fact highly likely, or at least a real risk, that the disruption of the provision of any service might result in a loss of revenue to the person who is responsible for the provision of that service."
Neave JA disagreed with Redlich JA. The third judge merely agreed with Redlich JA. I find myself substantially in agreement with Redlich JA's approach.
"He thus confirms an over-arching formula within which can, and he would say must, be found all cases of recognised duties of care. However he appears to recognise that for some categories of conduct, as for example where it creates a risk of harm (by which I take him to be referring to personal injury), "it is obvious that as a matter of common sense and justice a duty should be imposed". Furthermore, he (like Balcombe LJ in the Court of Appeal,  1 WLR at 1088-9) appears to be prepared to treat the three factors as interlinked. If this understanding is correct, and it ties in with what Lord Bridge said about attaching greater importance to the more traditional categorisation of established situations of liability (see above), no problem arises. The over-arching formula does not affect the outcome. Established categories, with or without the assistance of 'common sense and justice', provide the answer. The certainty provided by the previous authorities is not undermined. Indeed it would be surprising if Lord Steyn had, by his decision of what he described as a novel question relating to property or economic interests, intended to depart from or call into question established decisions and principles relating to personal injury. It is a truism to say that any case must be decided taking into account the circumstances of the case, but where those circumstances comply with established categories of liability, a defendant should not be allowed to seek to escape from liability by appealing to some vaguer concept of justice or fairness; the law cannot be re-made for every case. Indeed, the previous authorities have by necessary implication held that it is fair, just and reasonable that the plaintiff should recover in the situations falling within the principles they have applied. Accordingly, if the present case is covered by the decisions in or the principles recognised by previous authorities - and it is - Marc Rich does not require us to depart from them; indeed, we remain bound to follow them."
(a) in negligence cases which involve physical damage to property owned by a claimant, loss of use, loss of profit or loss of revenue can be recovered as damages, subject to causation being established and provided that it is demonstrably consequential upon the physical damage in question and closely associated with the physical damage and the work done to repair or replace the damaged property.
(b) Causation is established on the facts and the evidence.
(c) The fact that the loss of use, profit or revenue arises because a contract between the claimant and a third party makes the claimant liable to pay or allow it to the third party does not stop it being recoverable.
Discussion on Negligence
"The first of these enquiries, widely undertaken as a simple 'but for' test, is predominantly a factual inquiry."
I do not consider it necessary in this case to address what may be a purely academic point because it is clear that, whilst all loss recoverable in law in tort cases would not have arisen "but for" the tort, not all loss which would not have happened "but for the tort" is recoverable in law. It is academic here for two reasons:
(a) There is a direct causal connection between the acts of negligence and the physical damage in both cases, the need to put right such damage and the time taken to put it right.
(b) There is thus a direct causal connection between the acts of negligence and the losses or sums which Network Rail paid out or allowed to the TOCs based as they were simply on the time during which the damage was, necessarily and reasonably being investigated, cleared and remedied. A higher test is established than the "but for" test.
(a) The bulk of the formula in Clause 9 of Schedule 8 of the TAA involves the determination of the delay for which Network Rail was responsible to the TOC in question in a given Period. The result is applied to the Payment Rate set out in Column E of Appendix 1.
(b) There is no evidence as such about how the MRE and Societal rates which make up the Payment Rate were themselves calculated.
(c) It is probable that the product of research and experience on a best assessment basis was put in to the calculation of the MRE rate so that some elements of the loss of fare revenue on the day or days when the railway lines in question were closed or had a restricted use were allowed for. It is probable that a larger element was for the loss of future revenue from passengers' future unwillingness to travel on particular lines affected by any incident which had disrupted travel times.
(d) There is no doubt that the Societal rate part of the Payment Rate was designed to compensate the TOC for what it would have to pay the Franchising Authority.
(e) Again, there is no doubt that the MRE and the Societal rates were in place in a broad sense to provide incentives or corresponding disincentives to Network Rail and to the TOCs to avoid or limit disruptions to the rail services. The better that Network Rail performed, the greater was the chance that the TOCs would pay them under the Performance Regime in Schedule 8; the better that the TOCs performed, the greater was the chance that Network Rail would pay them. Of course, as between Network Rail and the TOCs, Network Rail took the risk and responsibility under this Performance Regime for damage to its bridges caused by the negligence of drivers which in turn cause disruption to the rail services.
(a) One has to analyse what the loss to Network Rail actually is.
(b) On any proper analysis, the sums payable to the TOCs were payable for the loss of use or availability of the rail tracks in question. This was the price, contractually agreed between Network Rail and the TOCs, which was payable in circumstances amongst others in which the rail tracks could not be used by reason of the negligence of drivers who damaged bridges or electricity cables over those rail tracks. One of the main uses to which Network Rail put the rail tracks was to license the TOCs to operate them.
(c) It cannot be said, and indeed it has not been argued as such, that the sums payable to the TOCs pursuant to the TAAs represented a penalty or were unreasonable or did not represent anything other than a best assessment basis of the loss to the TOCs of the use of the rail tracks for the period in question. It is a material fact that the Rail Regulator approved and endorsed not only the TAAs but also during the review process the Payment Rates, and their constituent elements, the MRE and Societal rates. Obviously, if the sums payable to the TOCs under Schedule 8 were a penalty, unenforceable in law pursuant to such authorities as Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd  AC 847, the law would find an appropriate way to ensure that the Defendants were not liable for them; that way could be for example that the loss does not flow from the breach or that the scope of the duty of care does not extend to the avoidable payment of unenforceable penalties. Similar considerations would apply if the sums claimed were otherwise demonstrably unreasonable.
(d) The loss of use can also legitimately be considered as a loss of revenue because in reality, by having to pay or allow the licensee TOCs the Schedule 8 sums, Network Rail's revenue from the TOCs was being reduced by the exactly the same amount.
(e) A key factor in the calculation under Schedule 8 is the amount of rail track or train delay caused in these cases by the negligently caused damage. That delay is made of the times reasonably taken for initial assessment by the emergency services and Network Rail of the accidents and damage and for the necessary and reasonable associated remedial works. There are no mitigation arguments left in this case as to whether Network Rail acted anything other than reasonably in these regards.
(f) The Defendants' negligence (that is, their breaches of duty causing physical damage and the need for the concomitant remedial works) therefore directly caused the delays which directly led to Network Rail not being in a position to make available the rail tracks in question for the periods of the delays, the direct financial consequence of which was that Network Rail had to pay or allow their licensees the Schedule 8 sums.
(g) The fact that within the calculation of those allowances there may have been or were included sums which the TOCs could not have claimed in negligence as against these Defendants is immaterial because it is necessary to consider in this case the position of Network Rail which clearly did have the right to sue for negligence in respect of the physical damage to its property. The reality is that, under the law as it now stands and has stood for many years, these Defendants would never have been liable in negligence to the TOCs for those losses because no property of the TOCs was physically damaged. The losses would therefore never have been recoverable directly by the TOCs. If the Defendants' arguments are right, the one innocent party, Network Rail, cannot recover its very real losses incurred directly in consequence of the Defendants' carelessness.
(h) It is irrelevant to consider what for instance the old British Rail, that is the organisation that historically owned the rail track and ran the train services before privatisation, would have been able to sue for. One needs to look at the position of Network Rail which only owns the rail track. The United Kingdom is one of a number of countries in the world which has moved from a nationalised and unified railway system to a privatised one. It would be unfortunate, at least, if the law was not able effectively to give redress to reflect the changed state of affairs of ownership and responsibility in relation to the organisation which owns the track (and bridges over and under it and level crossings). The law can give such redress consistently with established principle.
(i) Where one has, as here, a duty of care the scope of which includes losses demonstrably consequential upon the physical damage, it must, objectively speaking, have been reasonably foreseeable by tortfeasors in the position of these defendants that, if they seriously damaged bridges over rail tracks or overhead electric cables providing electricity to the railways, the railway services could or would be disrupted for a period of time whilst remedial work was being done. Thus, a loss of use and of revenue was a reasonably foreseeable consequence of the negligence in this case. It is argued that objectively speaking the tortfeasors in this case could not reasonably have foreseen either that payments would be due to the TOCs for the loss of use or that the payments would include incentives. However, this is not material in circumstances where a loss of use is reasonably foreseeable and the loss of use is readily quantifiable in money terms. It is not necessary for the precise loss or machinery by which the loss is ascertainable to be foreseen or foreseeable. In any event, it can hardly be said that a loss of use or indeed a loss of revenue was not objectively speaking reasonably foreseeable by tortfeasors in the position of these Defendants; as was said in the Metrolink case, there was nothing unusual about the facts that Network Rail would receive payment and revenue for providing the rail track for use by rail companies or that it would lose revenue if it did not provide the track. The fact that Schedule 8 provides a somewhat complex formula for determining the value or cost for the non-provision of the rail track is immaterial.
(j) There is nothing as a matter of policy which can readily be deployed to gainsay either a duty of care existing or the scope of that duty extending to compensation for the loss of use, particularly in circumstances in which previous cases establish an entitlement to loss demonstrably consequential upon the physical damage. The innocent party here is Network Rail; there is no suggestion for instance that it was contributorily negligent in causing or allowing this damage to occur, not that this would impact on the existence or scope of a duty of care. The fact that the consequential losses were, for the Bathley Lane and Howden Bridge incidents respectively, £1,021,957.93 and £127,070.62 should not give rise to a material policy consideration. It is argued that, because the Road Traffic Act 1988, Section 44, requires drivers to be insured in respect of third-party damage for £1,000,000, this should somehow be a reason for denying or limiting the duty of care in this case. There is no evidence as such, however, one way or the other, as to how many claims in excess of £1,000,000 arise as a result of similar damage or whether heavy goods vehicle drivers usually only carry the minimum statutory cover. I was told, albeit not as part of the evidence, that the average claim by Network Rail was considerably less than £1,000,000. It may of course turn out to be the case that insurers will in future offer higher cover as against this particular risk.
(k) It is argued by the Defendants that in effect the parties to the TAAs agreed to forego any entitlement by Clause 8.3 and 8.5 to exclude liability for loss of revenue or for losses and liabilities arising from interruptions or delays to trains and that therefore the type of loss, whatever it was, encompassed by Schedule 8 could not have included any (what would otherwise have been) recoverable heads of loss. That in commercial terms ignores the fact that Clauses 8.3 and 8.5 clearly envisage that all such losses shall or may be encompassed within Schedule 8 (or elsewhere in the contract). The parties have agreed that there shall be no freestanding claims for loss of revenue or train disruptions but have effectively agreed that all such entitlements are to be mutually considered as being covered by the entitlements and financial adjustments set out in Schedule 8 and elsewhere. Schedule 8 is either or akin to a liquidated damages or demurrage clause which relates to certain types of delays on the rail tracks to the train services. The rates payable where there is delay attributable to one party or the other were negotiated to reflect what the parties thought realistically represented the likely losses which each should reasonably bear in the case of delay.
(l) I can not see any or much significant difference in principle between the current case and the negligent driver who drives into a building which houses a shop which is licensed by the owner to a third person. The owner can sue the negligent driver for damages which would include the loss of the sums due from the licensee or compensation payable for the licensee not being able to trade from the premises whilst the requisite reasonable remedial works are done.
(m) In my view, the Defendants too often in their arguments have confused the losses actually suffered by the TOCs with the losses actually suffered by Network Rail. The former are substantially immaterial in the context of cases brought by Network Rail against the defendants such as those in this case. It is necessary to analyse the losses actually suffered by Network Rail and to determine whether they are truly consequential upon and closely associated with the physical damage which these Defendants negligently inflicted upon Network Rail.
The Law and Discussion on Nuisance and Trespass
"19.06. Intention or negligence in the defendant It is no defence that a trespass was due to a mistake of law or fact, provided the physical act of entry was voluntary…Similarly, in League against Cruel Sports Ltd v Scott  QB 240, it was held that a master of hounds was liable for the entry of his pack onto prohibited ground since, knowing of the risk of entry, he negligently failed to prevent an entry.
19.07 Entry without intention or negligence If the entry is involuntary-that is, if it is committed unintentionally and without negligence-no liability is incurred, the High Court of Australia has held that falling onto railway tracks in an epileptic fit is no trespass."
It is, fairly clearly, the editors' view that a non-deliberate but negligent incursion onto somebody else's property is a trespass. That, at the very least, appears to be a respectable view which is consistent with logic and principle and it is one to which I subscribe. It would be different if the incursion was involuntary and unavoidable. If X bodily throws Y onto someone else's land, Y will not be committing a trespass (although X probably will be). If Y in an effective state of automatism, say, a blackout from an unknown medical condition, drives his or her car onto someone else's land, that would be unintentional and non-negligent and no trespass.
"Even so, the submissions of learned Counsel…appears to me to be unrealistic when it is thought to be applied to the facts of this case, namely, that (a) the plaintiff was a licensee in the walkway, and (b) his encroachment of a few inches over or upon the sleepers of the commission's line was only inadvertent and involuntary and the result of his startled turnabout as a result of the warning shout…"
This is simply not authority that "inadvertent and involuntary" incursion onto another's land is or is not trespass. The judge was simply dealing with the facts in that case. In any event, it is difficult to see that negligence can be described as "involuntary" behaviour, given that the essence of negligence is a failure to exercise reasonable care and skill, which necessarily implies the failure to do something properly or at all which is within the control of the particular Defendant.
"20-01 Nuisance defined The essence of nuisance is a condition or activity which unduly interferes with the use or enjoyment of land…An actionable nuisance is incapable of exact definition and it may overlap with some other heading of liability in tort such as negligence...Nuisance is an act or omission which is an interference with, disturbance of or annoyance to, a person in the exercise or enjoyment of (a)…or (b) his ownership or occupation of land… or other rights used or enjoyed in connection with land, when it is a private nuisance,
20-02 Nuisance and trespass The distinction between trespass and nuisance is the old distinction between trespass and case. Trespass is a direct entry on the land of another, and is actionable per se, without proof of special damage, but nuisance is the infringement of the claimant's interest in property without direct entry by the defendant, and generally actionable only on proof of special damage…"
There is a suggestion here that the same act complained of can not generally or usually be both a trespass and a nuisance.
"(1) causing an encroachment on his neighbour's land, when it closely resembles trespass;
(2) causing physical damage to his neighbour's land or building or works or vegetation upon it; or
(3) unduly interfering with his neighbour in the comfortable and convenient enjoyment of his land." (Paragraph 20-06)
"Now one principle to be borne in mind is that the damages can only be granted to injuries which are the direct result of the act of omission or commission complained of…" (page 129)
He then went on to reject a particular claim which was in effect in relation to a reduction in the rental value of houses even when put into repair, which these days might be called a stigma diminution, in these terms:
"It is not damage which is the natural result of nor directly caused by the flood. It is entirely different from injury to the structure of the houses, and in my opinion…that sum…must be struck out" (page 131)
I do not consider that in practical terms these thought processes exclude or indeed widen the basic entitlement to damages adumbrated in this judgement for negligence of the types with which this case is concerned.
"Taking all these cases together, therefore, it would appear that consequential losses will be recoverable either specifically or by way of aggravation, subject as always to their not being too remote in the causal sense."
I endorse that approach. It will, at least in practice, be a rare case in which a wholly and objectively unforeseeable financial consequence of a trespass will give rise to a valid claim. I can only comment that this particular area of the law of trespass to land does not appear obviously or recognisably to have raised its head since the common law began to emerge 900 to 1000 years ago and I doubt that it will need to emerge in the future.
(a) as against Conarken, in the total sum of £293,742.32 made up of £127,070.62 and £166,661.70 in relation to the Schedule 8 losses and remedial works costs respectively.
(b) as against Farrell Transport, in the sum of £1,017,144.66 in relation to the Schedule 8 losses. There need be no judgement in relation to the cost of remedial works, the agreed sum for which was paid by Farrell Transport in mid-June 2010.