The legal entitlements (and obligations) of the parties are set out in the TAC they have entered into. The Network Code is a critical component of the contractual relationship between the parties. The importance of compliance with the Network Code was made clear by the ORR in its appeal decision on TTP1331 and TTP1376 (albeit the similar Network Rail Network Code in those decisions)

(HAL/TTP002, para 55)

This principle was tested again in HAL/TTP003, and the ORR determination of the same -

The legal entitlements (and obligations) of the parties are set out in the TAC they have entered into. The Network Code is a critical component of the contractual relationship between the parties.

(HAL/TTP003, para 156)

ORR wishes to emphasise, however, that where industry seeks to depart from the existing provisions of Network Codes, it should do so by following the process for modification contained within the Code itself in order to avoid unnecessary confusion and uncertainty among industry participants. The dates and processes in the HAL Network Code, which is based on the Network Rail Network Code used across the wider rail network, have been very carefully worked out over a number of years to provide for an effective and transparent process for all industry participants. The HAL Network Code provides a formal process in Part C for modification which, if followed, would have allowed for greater clarity on the position of the Change Strategy and the corresponding contractual requirements for all parties.

This appeal is a good example of the confusion which can ensue when industry fails to adhere (or does not properly formalise changes) to the clear processes set out in Network Codes … HAL’s representation in this appeal that its publication of the NWT was effectively late, has led to confusion about what the knock-on consequences should be for the remaining dates in the HAL Network Code when an NWT is not published on time.

Finally, ORR observes that across industry each Network Code has a formal modification process to provide legal certainty for industry participants. Changing the timescales and processes, from those within a Network Code, without following the proper modification procedures puts all parties at risk in the case of a dispute, as highlighted in this appeal. ORR therefore encourages the industry to ensure there is clarity over these Network Code processes to mitigate this risk.

(ORR determination of HAL/TTP003, paras 41, 42, 98)

…the parties had referred the Panel to a meeting of the Industry Timetable Assurance PMO Collaboration Sub Group, which took place on 8 October 2021 (the Friday prior to the hearing) … The Panel did not consider that the PMO had any right to make specific representations to the Panel. Part D was put into effect before the creation of the PMO and has not subsequently been amended to take it into account.

(HAL/TTP003, para 67)

ORR considers it was open to HAL to start conversations with Timetable Participants in March about whether they were planning to make the same requests in July, and to commence its deliberations accordingly. It was not necessary for HAL to wait until July 2021 to begin the process.

(ORR determination of HAL/TTP003, para 62(a))

MTR complains that HAL was in breach of Network Code D2.7 because the December 2020 WTT was not issued by D-26. The Panel finds there was a breach. The WTT was not issued until on or about 26 June 2020; it was about two weeks late. In its appeal decision in TTP1331 and TTP1376 ORR regarded such a breach of the Code as a breach of contract. Such a breach might entitle an aggrieved contracting party to a remedy, perhaps damages, if it can show that it has suffered a foreseeable loss, but ORR had made it clear that a decision on such a question is outside the remit or jurisdiction of a timetable panel hearing an appeal.

Such remedy as an aggrieved party may have lies in a different forum

(HAL/TTP002, para 61)

The Panel considers that it was not open to HAL or Network Rail to issue a legally binding request or suggestion to delay or defer TOVRs. That it did so might amount to a breach of contract, or at least an indication that it did not propose to comply with an obligation under Part D.

(HAL/TTP002, para 61)

The Panel has heard the submission that the July Proposals were TOVRs but is not

persuaded by that submission. A plain reading of Condition D3.1.1 provides that a TOVR

may have in view either the variation of the New WTT, or the WTT on an ad hoc basis. The

July Proposals clearly had the first of those options in view but at a time when there was no

New WTT which was capable of variation under Part D. In coming to this conclusion, the

Panel bears in mind that Condition D3.1.1 is expressed to apply “from D-26”, i.e. the date

on which the New WTT is intended to be published (it is the Panel’s view that logically a

Timetable Participant must have notice of the NWT before it can seek to vary it).

It follows from the above, that the Panel is of the view that the July Proposals have no

contractual status. The Panel emphasizes that it has seen no evidence of anything other

than good faith and an attempt by the industry to try to manage the effect of COVID-19 on

a pragmatic basis, but consistent with the observation of the panel in reference

HAL/TTP002 it is the Panel’s view that the failure to publish the New WTT at D-26 was a

breach of contract which might entitle an aggrieved party to a remedy but the Panel

reminds itself that the question of any remedy is outside the remit or jurisdiction of a

Timetable Panel hearing an appeal.

(HAL/TTP003, paras 168, 169)

[ORR overturned this at appeal, thus:]

ORR considers that the Panel erred in deciding that the July Proposals were of no contractual status. As stated above, all parties considered that the July Proposals were the relevant proposals for HAL to consider and therefore considered them to have some meaning.

Against this background, ORR considers that the most fair and reasonable outcome on the particular facts of this case [emphasis added] would have been for the Panel to treat the July Proposals as if they were the relevant Access Proposals, for the following reasons:

(a) Both Timetable Participants submitted proposals on 9 July, which was the revised Priority Date under the Change Strategy. Therefore, it is reasonable to assume that the parties intended their July Proposals to be treated as Access Proposals.

(b) Revised Access Proposals and TOVRs have a lower priority in the decision making process than Access Proposals submitted by the Priority Date or Rolled Over Access Proposals (“ROAPs”). To treat the July Proposals as TOVRs or Revised Access Proposals would be to treat both Timetable Participants as having acted unwittingly in a manner which prejudiced themselves.

(c) If HAL was correct, then its failure to publish an NWT by D-26 was a breach of contract by it. ORR considers it would be unjust for Timetable Participants to be prejudiced – by what would otherwise be Access Proposals, or at least Revised Access Proposals, being treated as lower priority TOVRs – as a result of HAL’s unilateral breach of contract. This seems particularly unfair where both parties did everything they could to make timely Access Proposals.

(d) Both Timetable Participants made relevant proposals on the same date in March, and again on 9 July. Given that they were acting in lockstep in this way, it is fair and reasonable to give them equal priority.

In light of these conclusions, ORR does not consider it necessary to deal further with

HAL’s detailed representations about whether the July Proposals were TOVRs.

(ORR determination of HAL/TTP003, paras 48, 49, 50)

Regarding the Objective, HAL submitted at Paragraph 4.20 of its Sole Reference Document to the Panel that the Objective referred to sharing the HAL infrastructure as a whole, not sharing specific platforms. Whilst this may be true, ORR considers this gives insufficient regard to the fact that MTR’s Exercised Firm Rights are Firm Rights to access particular platforms.

(ORR determination of HAL/TTP003, para 55)

Condition D4.2.2(d) is only engaged when the decision maker has exercised its contractual rights to flex and still cannot accommodate all requested Train Slots.

(HAL/TTP003, para 178)

Part D of the Network Code is generic and will form part of all TACs entered into by HAL. Part D does not just concern the rights and obligations of the contracting parties [the Dispute Parties at the hearing]; it concerns all Timetable Participants. HAL has an obligation to balance and consider rival rights and contentions.

(HAL/TTP002, para 57)

… I note that the relevant Consideration refers to commercial interests, rather than simply revenue. The phrase ‘commercial interest’ should have its ordinary and general meaning and I accept MTR’s submission that the assessment of a party’s commercial interest is a question which encompasses more than revenue or profit generated in a particular period.

(HAL/TTP003, para 138)

The application of the Decision Criteria (cumulatively the Objective and the Considerations) amounts to an exercise of contractual discretion.

A contractual discretion must be exercised in good faith and not capriciously. The duty of rationality is now well established and is often referred to as the ‘Braganza’ duty after the leading case, Braganza v. BP Shipping Ltd [2015] UKSC 17 and is implied by law. A discretion must be exercised consistently with its contractual purpose: British Telecommunications plc v. Telefonica O2 UK Ltd [2014] UKSC 42.

The duty of rationality is intended to act as a safety valve to protect one party from taking advantage of its role as a decision maker.

In summary, to comply with the duty of rationality, the decision-maker must:

a. Ask the right question, taking into account the circumstances and the terms of the contract;

b. Take account of relevant matters;

c. Ignore irrelevant matters; and

d. Avoid a result so outrageous that no reasonable decision maker could have reached it.

The process must be consistent with the parameters of Condition D4.6.

(HAL/TTP003, paras 170, 171, 172, 173, 174)

… The Panel concludes that HAL asked the wrong starting question by reaching a concluded view without ‘stepping through the parts’.

Having heard the submissions of the parties, the consistent theme that runs through HAL’s approach is a concern with performance and in seeking to avoid PTI concerns. The Panel accepts that the safe carriage of passengers is a factor in the Objective and that Consideration (c) required HAL to consider maintaining and improving train service performance. This is, however, only one of a number of Considerations but having heard submissions it appears to have been weighed especially heavily. In its written assessment, however, HAL’s assessment has not attributed weightings between the different Considerations but has weighed them equally.

It is the Panel’s view that HAL was not properly informed with sufficiently complete and/or useful data when it reached its view in connection with a number of material matters. As examples HAL did not have sufficient data on passenger numbers or the spread or balance of passenger demand and no data had been sought from MTR. Had sufficient data been available it is the Panel’s assessment that a reasonable decision maker might have assessed some Considerations, particularly (b), (d), (e) and (h), in MTR’s favour considering the broader spread of services which would result from the exercise of MTR’s Firm Rights to T5, reducing the number of connections for passengers not transiting to or from central London, and avoiding the need to run empty rolling stock on the HAL infrastructure.

This was not an assessment which required particular urgency and the Panel considers that it should have been taken with the benefit of fuller evidence.

(HAL/TTP003, paras 180, 183)

[This conclusion was overturned by ORR, thus:]

ORR considers that this part of the Panel’s decision amounts in effect to concluding that HAL’s decision was predetermined. ORR does not consider the Panel had sufficient evidence before it to reach this conclusion and therefore its conclusion in this regard was not reasonable …

[However] ORR considers it was reasonable for the Panel to determine that HAL needs to have a proper evidential foundation for its conclusion about the demand that exists for various types of service, for both current and prospective users of the two services. If HAL already has this evidence, then it should be able to demonstrate that it has used it. If not, then it should obtain it …

ORR agrees with the Panel that HAL ought to have provided a clearer evidential basis for its concerns about the increased risk of incidents at the PTI …

ORR agrees that there is room for infrastructure managers to exercise professional judgement in their decision-making. However, ORR considers that this professional judgement should always be exercised in light of whatever objectively ascertainable data the infrastructure manager ought reasonably to obtain. ORR does not consider that it is open to a decision-maker to make assumptions about questions of objectively ascertainable facts that it reasonably ought to have gathered by way of evidence.

On balance, ORR considers that the Panel’s conclusion that HAL had insufficient information to make the decision that it did was reasonable. HAL dismissed potential alternatives too readily and did not do enough to endeavour to find an acceptable solution that was consistent with all Exercised Firm Rights. ORR therefore upholds the Panel’s decision that HAL’s decision should be set aside on this basis.

(ORR determination of HAL/TTP003, paras 66, 72, 73, 75, 86)

[Parties should follow the clear submission guidance set out in ADC templates and avoid submitting excessive paperwork.]

In passing, I should say that the Panel was not particularly assisted by the volume of documentation submitted by MTR at Appendices 14 to 19 of its SRD. These are largely generic documents which significantly predated this reference and, accordingly, they were of limited value in the circumstances.

(HAL/TTP003, para 63)

In making this determination I confirm that Network Code Condition D5.3.1(c) does apply for the following reasons:

a. Ordinarily – on the application of Part D – a TTP determination on appeal which requires to be factored into the NWT would be handed down sufficiently far in advance of the Timetable Change Date. This has not happened on this occasion. This is atypical and results from workarounds relating to the COVID—19 pandemic which is itself an unusual factor;

b. Ordinarily there would be time for HAL to reconsider its approach but the 12 week window for publicity of the December 2021 timetable has already started and NR has already received bids for the beginning of that timetable. I bear in mind that the overriding objective set out in ADR Rule H16 requires disputes to be administered in a way which is proportionate to the need to ensure that production processes for the railway operational timetable are not disrupted to the potential detriment of third parties; and

c. Ordinarily, the TOCs would not reasonably expect any exceptional change in demand during the currency of a WTT. Exceptionally, it is likely that passenger demand will increase prior to May 2022 as recovery from the COVID-19 pandemic continues and it remains unclear when T4 will reopen. This justifies putting in place a through service for intermediate stations to T5

(HAL/TTP003, para 189)

[ORR found that the Chair was not in a position to exercise his power under D5.3.1(c) as follows:]

ORR considers that in substituting its own decision, the Panel produced a determination which suffers from the same weakness as that of HAL, i.e., that it was made in the face of a “paucity of available data” (Paragraph 182 of the Determination). Therefore, the Panel’s application of the Decision Criteria was necessarily subject to the same flaws as those in HAL’s decision. In short, the Panel was not in a position to exercise its power to make a substituted decision. Therefore, ORR considers that this part of the Panel’s decision should be set aside.

Instead, the decision should be remitted back to HAL who should make a fresh decision in light of the ORR’s findings above.

(ORR determination of HAL/TTP003, paras 90, 91)

Regulation 32 of the Regulations provides a broad right of appeal for an applicant to ORR where it “believes that it has been unfairly treated, discriminated against or is in any other way aggrieved, and in particular against decisions adopted by the infrastructure manager…”. The provisions go on to set out the range of matters which may be the subject of an appeal including, but not limited to, the allocation process and arrangements for access, which are matters which relate to this appeal.

ORR confirmed that HEOC, as a train operating company, has a prima facie right of appeal to ORR as an “applicant” under Regulation 32 of the Regulations. Although HAL does not have a similar right of appeal as an “applicant”, ORR considers it is nevertheless directly involved in this dispute. ORR confirmed that HAL should be treated as a “relevant party” which has a right to be “consulted” in any appeal under Regulation 32(5)(a) of the Regulations.

ORR has therefore treated HAL’s Appeal Notice as the representations HAL is entitled to make in response to such consultation.

ORR also notified the parties that it intended to use its discretion under Regulation 32 of the Regulations to conduct its determination of this appeal in accordance with the provisions the parties had agreed between themselves, as set out under Parts D and M of the HAL Network Code. ORR considered this to be in line with what the parties themselves had contractually agreed as being acceptable and would ensure consistency in ORR’s process when hearing timetable disputes involving other infrastructure managers and networks.

… whilst HAL has a right to be consulted and its representations have been taken into account by ORR, HAL does not have a right to pursue an appeal under Regulation 32 of the Regulations.

(ORR determination of HAL/TTP003, paras 19, 20, 21, 22)