This Page was last updated on 13th February 2009
Network Code Section |
Determination |
Date of Hearing |
Points made within Determination (Verbatim extracts given in Italics, or between “quotes”) |
F1.4 |
NV5 |
July 2001 |
“The
obligation to comply with the requirements of this Part F shall be without
prejudice to the obligations of the Access Parties to comply with the Railway Group Standards.”
Formerly Track Access Condition F1.1, F1.4 in October 2005 version The Committee found that this is a statement of fact and does not create interdependence of obligations: {NV5} “ 6.2 the force of Track
Access Condition F1.1
was to prevent an Access Party from praying the Track Access Conditions in
aid as an excuse for non-compliance with Group Standards; and that 6.3 Track Access Condition F does not impose
any obligation on Railtrack to undertake works at its own initiative and
expense with a view to modifying lines of route to comply with relevant
Railway Group Standards for new works”. “8.2 Railtrack’s liabilities under Track
Access Condition F, in respect of the costs of changes required to
accommodate a Vehicle Change, are not increased or changed by any other
duties that may be imposed on Railtrack in respect of Railway Group
Standards” |
F1.4 |
ADP11 |
November 2005 |
15.
“The right to introduce new rolling stock
to the system requires the parties (Network Rail and the Train Operator) to
comply with the provisions of Network Code Part F, Vehicle Change. 15.1.
This compliance, which is “without
prejudice to the obligations of the Access Parties to comply with Railway
Group Standards” (Network Code F1.4) (e.g. fulfilment of NRAB stipulations)
is fundamentally concerned with assuring Network Rail, and other Train
Operator users of the Network, that the capabilities of the Network, as
currently operated, will not be adversely affected by the operation of the
new rolling stock; whence the emphasis, in the Vehicle Acceptance procedures,
on ensuring that the new stock is compliant with all “Red line”
criteria. 15.2.
It is always possible that the Network, as
currently operated, is host to certain anomalies, such as stray electrical
frequencies. If those anomalies have
previously remained undetected, and/or have no evident impact upon the
current operation of either the Network, or train services upon the Network,
then they can reasonably be deemed to be part of the established contractual
environment. 15.3.
Neither the operation of Part F, nor the
associated NRAB procedures, can reasonably be construed as providing a Train
Operator, seeking to introduce new stock, with a warranty that there are no
such latent anomalies. New stock,
utilising new technology, may “discover” the presence of such anomalies. If, as in this case, that “discovery”
relates to those aspects of the design of the ADDT and LIM which relate to
discretionary “Blue Lines” (rather than mandatory “Red Lines”), it is not
reasonable for the operator of the new stock to expect to be indemnified
against the impact of a phenomenon which, were it not for the design of the
new stock, would have remained without significance.” {ADP11} |
Network Code Section |
Determination |
Date of Hearing |
Points made within Determination (Verbatim extracts given in Italics, or between “quotes”) |
F 2.1 Submission of proposal |
ADP31 |
February 2008 |
“If a Train Operator wishes to make a Vehicle Change, it shall….(a) submit to Network Rail a proposal for such change” “3.
….the Panel was asked to consider a number of arguments calling into question
the very use of the Vehicle Change procedure in this case. The Panel considers it appropriate
therefore to confirm the principle, based on oft repeated precedent, that
Parts F and G of the Network Code should be used in any circumstances where
one party (Network Rail or Train Operator) asks that it be so used, because
their procedures facilitate the reaching of clear understandings. That principle would be undermined if the
Panel were then to concur with one argument put forward in this case, namely
that merely because one party invokes those procedures the change in question
becomes, by definition, a “Vehicle Change” within the terms of the Track Access
Contract.” {ADP31} |
Definitions “Vehicle Change |
ADP31 |
February 2008 |
26. “In
considering therefore the question of whether or not the introduction of the
Class 142 trains to the list of “Specified Equipment” within the FGW Track
Access Contract constituted a Vehicle Change, the Panel found that: 26.1. before FGW could commence regular operation
of regular Passenger services over these routes using Class 142s, it had
needed to seek an amendment to its Track Access Contract to include these
trains as Specified Equipment; 26.2. inclusion
of Class 142 trains within the clearance tables in the Sectional Appendix
confirms that the stock will fit physically onto the route in question, “for
interim or full service operation” (General Notes to Section 3 of
Sectional Appendix). 26.3. the
Sectional Appendix is one of the key documents of reference for Train
Operators and there must be an expectation that, where a class of rolling
stock is classified Y in the relevant Table 3, an application for rights to
use that class of vehicle will not be contested on grounds of physical “fit”;
26.4. except
where Network Rail specifically agrees an amendment to the Track Access
Contract, inclusion of a type of passenger rolling stock in the Sectional
Appendix, does not confer upon a Passenger Train Operator any right to
include such stock in the Specified Equipment, or to use such stock to
operate services for which it otherwise has access rights. (For the avoidance of doubt this finding
relates specifically to the Passenger Track Access Contract only; the Panel
acknowledges that within the Freight Track Access Contract, the Sectional
Appendix has a more specific standing in relation to the “Operating
Constraints”); 26.5. …… 26.6. … 26.7. 26.8. the
introduction of Class 142 trains onto the routes in question at very least requires
Network Rail to reassess in detail, and very probably to change, the
maintenance regime necessary to maintain the track (in particular in respect
of track inspection and rail wear), as compared with the regime that has
operated since before Privatisation.
There can be no question but that this change to the “Specified
Equipment” in the FGW Track Access Contract will also “materially affect
the maintenance …of the Network”, and therefore 26.9.
the inclusion of the Class 142s into the
Specified Equipment of the FGW Track Access Contract IS a Vehicle Change,
rendering FGW potentially liable to pay compensation under Part F of the
Network Code. ”(ADP31) This finding was appealed by FGW as part of a response to a
larger appeal from Network Rail against the compensation findings in ADP31. ORR, in a determination dated 29/09/2008, upheld the Panel’s
finding on this point, and added the following additional reinforcing
arguments (ORR words in italics) o The
definition of “Vehicle Change” depends in every case upon the qualifier “which
in any case, is likely materially to affect the maintenance or operation of
the Network, or operation of trains on the Network, but excluding any
authorised variation”. o “ORR
interprets the term “is likely…to” as requiring a prospective assessment
based on objective evidence that a particular outcome is more than merely
possible, but less than certain to occur.
ORR concludes that the adverb “materially” is intended to exclude
effects which are minimal, but does not require that any effect should be
substantial. In assessing whether
there has been a material effect, ORR has regard to effects other than purely
financial costs and has regard to the state of the Network at the time of the
Proposal[for Vehicle Change]”.
(ORR Determination para 34). o
“The inclusion of rolling stock in the Sectional Appendix
demonstrates that the Network is physically capable of accommodating the
rolling stock on the route in question.
The Sectional Appendix is not incorporated in the TAC and it is the TAC
which defines the stock which the Train Operator is entitled to use on the
relevant part of the Network as a matter of contract. ORR accepts that there is a distinction
between the treatment of freight and passenger TACs in this respect (as noted
by the Panel inpara 7.3 of the Determination), but the present case concerns
a passenger track access contract.
ORR attaches importance to the fact that the draughtsman of Part F has
defined Vehicle Change by reference to the Specified Equi[ment and not the Sectional
Appendix” ]”. (ORR Determination para 38). o The
need to amend the “Specified Equipment”, combined with the probable need to
install extra flange lubricators means that the introduction of Class 142s
qualifies as Vehicle Change. “….ORR
considers that the Panel was correct to determine that the proposal
constituted a Vehicle Change” (paragraph 41) |
Definitions “Working Timetable” and
“Sectional Appendix” |
ADP31 |
February 2008 |
Defined in Part A
as “the timetable which Network Rail is obliged to draw up pursuant to
Condition D1.6.1”. Custom and
practice of many years is that the Working Timetable embraces a number of
other key operating documents. This became a
decisive question in determining ADP31, where the Panel found that it had to
consider the contractual status of the Sectional Appendix. It concluded “This document, full title “the
Sectional Appendix to the Working Timetables and Books of Rules and
Regulations” is NOT given a defined contractual status within the Network
Code or a Passenger Track Access Agreement, except insofar as it is
incorporated by reference by virtue of its title, and the obligation on
Network Rail to produce (under Part D) a “Working Timetable”. The Panel was familiar with the
operational use made of the Sectional Appendix; its attention was drawn to a
statement by the ORR in March 2006 (order against Network Rail for
contravention of Condition 7 of its Licence), which states “the capability
of the infrastructure is described in the sectional appendix for a particular
part of the network (including such matters as gauge, line speed, and route
availability). The sectional
appendices are incorporated in the industry network code and are used in
access contracts between Network Rail and freight [emphasis added]
train operators to describe the network covered by the contract. It is therefore important that these
documents are accurate”. The tabulations and format of the various volumes
of the Sectional Appendix are then governed by a Railway Group Standard
(formerly GE/RT/8004; to be superseded by GO/RT/3215), but the route specific
content and detail is the responsibility of the respective management areas
within Network Rail. ” {paragraph 7.3 ADP31} |
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Network Code Section |
Determination |
Date of Hearing |
Points made within Determination (Verbatim extracts given in Italics, or between “quotes”) |
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F3.1 ..Notice of
response |
ADP14 |
February 2006 |
17. In respect of this last consideration the
Panel was of the view that the manner in which Network Rail had formulated
its claim for compensation was of the essence of the dispute. Therefore, for the avoidance of doubt,
the Panel drew the following distinctions; 17.1. Condition F3.1 (c) conceded to Network
Rail the right to apply to be compensated “for the consequences of the
implementation of the [Vehicle] change”. However, 17.2. the onus of proof, to demonstrate that the
type of compensation sought in this case was admissible under the terms of
Part F, was on Network Rail, and that 17.3. the onus of proof has to be discharged
through the interpretation of the contractual documents currently in
force. 18. … 19. Condition F3.1 provides for any claim by
Network Rail for compensation to be made by means of a notice, and that any
such notice “shall include a statement of the amount of compensation
required”. Condition F3.2 provides that ”Subject to
Condition F3.3 [which requires off-setting benefits to be taken into account]
the amount of compensation…shall be an amount equal to the amount of
the “costs, direct losses and expenses” (including loss of revenue)…which can
reasonably be expected to be incurred by Network Rail…as a consequence of the
implementation of the proposed change…”. The Panel considered that Condition F3.1
thus requires a claim for compensation to be presented in terms of a stated
amount, based upon a pre-estimate of the costs etc likely to be incurred,
whereas Network Rail’s claim was, in effect, a claim to be indemnified in
respect of an un-stated amount, to be quantified only on the basis of a
further (after the event) assessment.
In the Panel’s view, a claim expressed in these terms was not
admissible under Condition F3.1. {ADP14} |
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F3.2 “Amount
of Compensation” |
ADP14 |
February 2006 |
22. The Panel was clear in its understanding
that, if either party considered that the application of the laid down
process for calculating the VTU charge created a degree of unfairness
considered intolerable, then the proper (and only) remedy was to apply to the
Office of Rail Regulation for some form of special relief, recognising that
to amend the basis of calculating the VTU charge would affect the charges
payable in respect of all classes of rolling stock. Condition F3.1, in its present form, does not entitle Network
Rail to impose, through a claim for compensation, what would be in effect a
variation of the VTU charge (away from the formula), without the need for
Office of Rail Regulation approval. 23. The Panel noted that, as part of
progressing the Vehicle Change procedures, TPE had met various development
costs, including direct payment for the calculation of bespoke Sectional
Running Times for the Class 185. It
was noted that charges/compensation claims of such a nature are properly
one-off payments, relating to the process of change or transition, that can
be assessed in advance; they are not on-going, and/or open-ended commitments
to reimburse, or indemnify, Network Rail against un-quantified contingencies. 24. … 25. … 26.
… 26.6. a claim for compensation cannot be used to
create a supplementary, and unregulated, stream of Track Access charging,
over and beyond the categories of charge envisaged in Schedule 7 of the Track
Access Contract, and in the Office of Rail Regulation’s Access Charges Review
of 2003; 26.7.
for the
avoidance of doubt, any monitoring of the interaction between rolling stock
and track, is considered by the Panel to fall within the basic accountability
of Network Rail to manage the Network, and as such, therefore, did not
justify separate supplementary funding through Part F; 26.8. TPE is required to pay the VTU charge for
the Class 185, but otherwise, on the basis of the arguments presented to the
Panel, Network Rail is not entitled to claim, and TPE is not under any
obligation to pay, compensation in respect of “costs associated with any
increase in track wear and resulting increased maintenance requirements,
compared to existing vehicles being operated over approved routes” {ADP14} |
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F3.2 “Amount
of Compensation” |
NV35 |
December 2001 |
Where
there have been different, and inconsistent methodologies used to determine
the works that might need to be undertaken, there is correspondingly greater
need to ensure that all such details are clearly documented, in order to
substantiate the legitimacy of any compensation claimed. {NV35} |
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F3.3 “Benefits
to be taken into account” F3.2 “Amount
of Compensation” |
NV5, |
July 2001 |
Even where there may be evidence that a section of
line does not comply with Railway Group Standards for new works, this does
not automatically imply that Railtrack has a duty to upgrade that line in
advance of need. Equally the Train
Operator of a vehicle that could pass over such a line (were it upgraded)
should not have responsibility to pay for works that are not necessary for
that particular vehicle. {NV5} Railtrack may elect to
carry out the works to accommodate a new vehicle to a standard that complies
with Railway Group Standards (but exceeds straightforward immediate
need); the calculation of
compensation should take into account the value of the changes to both the
Train Operator and to Railtrack. “8.1
there is a duty imposed by Track Access Condition F on a party wishing
to introduce a Vehicle Change to compensate other parties, including
Railtrack, for the reasonable costs they might reasonably expect to incur to
make such a change possible;” {NV5} “8.3
it is NOT reasonable to argue that 8.3.1 any changes to the infrastructure
required to implement a Vehicle Change automatically have no benefit to
Railtrack, taking into account all considerations of inter alia, reliability,
asset maintenance, normal renewals, and the duties in respect of Railway
Group Standards; and that therefore 8.3.2 [it is NOT reasonable to argue that] such benefits have no value in relation to any calculation of compensation
in accordance with Track Access Condition F3.3;”. {NV5} |
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F3.3 “Benefits
to be taken into account” F3.2 “Amount
of Compensation” |
ADP31 |
February 2008 |
27.
“In relation to the arguments regarding the components of the
funding settlements in either CP3 or CP4, the Panel considered the following
points: 27.1.
payment for
track access by a Train Operator to Network Rail is made, currently, in two
stages, namely a fixed charge, and a number of variable charges, of which, in
this case the Variable Track Usage Charge (VTU) is the most substantial. In general terms, and in the absence of
any other bespoke (and regulated) arrangements, these payments form the main
part of the income that Network Rail receives to fund its duties to each
Train Operator. 27.2.
the VTU, in
simple terms, represents Network Rail’s total “wear and tear” costs that
arise from the variable incidence of train mileage, and which are apportioned
by vehicle type: 27.2.1.
within
current (CP3) access charges, the VTU allocation takes account of the dynamics
in relation to only the vertical movements of rail vehicles; 27.2.2.
moves are
afoot to incorporate a number of other factors relating to lateral dynamics
(e.g. curving performance and rail wear) into the calculation of the VTU
allocation in CP4; 27.3.
in each case
(CP3 or CP4), the definition of the element of income derived from VTU, as
opposed to that derived from the fixed charge, has not made any difference to
either the scope of Network Rail’s obligations to the Train Operators, or the
Train Operators’ rights in relation to the standard of the Network
provided. Such rights and
obligations are as stated on the face of the Track Access Contract; 25.
In relation to the operation of the Vehicle
Change procedure, the Panel re-affirmed that establishing whether or not a
change qualifies as a Vehicle Change, is a process discrete from that which
may establish that compensation is payable.
If there is no Vehicle Change, then there can be no compensation, but
even where Vehicle Change is proven, compensation may not be payable.”{ADP30 |
ADP31 |
February 2008 |
F3.3 “Benefits
to be taken into account” F3.2 “Amount
of Compensation” |
ADP31 |
February 2008 |
28.
“In relation to
the questions of possible compensation payable by one party to another (and
the consideration of any off-setting benefits), the Panel considered that
this required it to take account of the role of FGW in selecting which stock
is used, and that of Network Rail in deciding which is the appropriate
maintenance regime for the traffic likely to pass at any time and to
determine whether FGW, by introducing the Class 142s is causing Network Rail to do maintenance that is
distinctively different, or merely to do a different quantity of what it has
done previously. 29.
Network
Rail, to assist in the discharge of its responsibilities in respect of track
maintenance, has codified the procedures and thought processes it mandates
should be applied, in order to achieve appropriate standards and outcomes,
into Business Process Documents.
These Business Process Documents, 29.1.
are not
Railway Group Standards within the terms of the Track Access Contract; and 29.2.
do not
impose on Network Rail any contractual obligations to Train Operators in
relation to specific outputs, in respect of the use of one particular track
maintenance technique as opposed to another, beyond the general obligation to
enable each Train Operator to fulfil the terms of its Track Access Contract.”{ADP30} |
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F3.3 “Benefits
to be taken into account” F3.2 “Amount
of Compensation” |
ADP31 |
February 2008 |
“ 36.
For all the
foregoing reasons therefore, the Panel determines that 36.1.
the
inclusion of the Class 142’s into the Specified Equipment of the FGW Track
Access Contract IS a Vehicle Change, rendering FGW potentially liable to pay
compensation under Part F of the Network Code. However 36.2.
there
is no contractual or other obligation that specifically requires Network Rail
to introduce flange lubricators on the routes in question to mitigate the
effects of the introduction of Class 142s.
Nevertheless, 36.3.
the change of rolling stock does not change
Network Rail’s obligation to discharge its general duties in compliance with
identified best practice. In this
case, this includes compliance with the procedures in NR/SP/TRK/8006 Business
Process Document: “Installation and Management of Rail Mounted Lubricators”
in respect of action to counter excessive rail sidewear. Therefore it follows that where Network
Rail determines that there is a need to install flange lubricators
specifically in order to mitigate excessive rail sidewear, such flange
lubricators shall be installed at Network Rail’s expense, and the
installation costs cannot be reclaimed from FGW as compensation under Network
Code Part F; 36.4.
for
the avoidance of doubt Network Rail shall not, as a consequence of this
determination, be required to take responsibility for the costs of any other
measures (which may include other flange lubricators not related to increases
in rail wear) needed to mitigate the adverse consequences of operating Class
142s, but that were not otherwise needed for the stock previously operated on
these routes. 36.5.
the
Panel does not see that any costs payable in consequence of this
determination would be eligible for any level of abatement on the grounds of
off-setting benefits;…”{ADP31} This finding was appealed by Network Rail who challenged the
compensation findings in ADP31. ORR, in a determination dated 29/09/2008, upheld the Panel’s
determination on this point, insofar as the practical impact was that Network
Rail would not be entitled to be compensated for the costs of installing
flange lubricators. ORR, however,
in its determination, does not directly address the merits of the Panel’s
reasoning, but develops its own reasoning by reference to the Licence Obligations
upon Network Rail, considerations that the Panel had not previously been
called upon to consider. (ORR words
in italics) Specifically ORR
based it’s decision that Network Rail was not entitled to require FGW to meet
the costs of any additional flange lubricators on consideration of Condition
7 of Network Rail’s Network Licence, and of the provisions the ACR03
Conclusions, the “Railways Act Notice” of 2nd March 2006, and a
letter from ORR to Network Rail on Network capability of 8th July
2005. None of these documents had
been placed before the Panel, nor is it apparent that the latter two had been
prayed in aid of any arguments advanced by either party in relation to the
appeal. On the basis of its
interpretation of these documents, “…ORR derives the following conclusions (i)
NR is required to maintain the Network in a condition that enables
it to be used by those vehicles that are listed without restrictions in the
Sectional Appendix. (ii)
If a proposal is made to introduce vehicles listed without
restrictions in the Sectional Appendix onto that part of the Network, it is
for NR to ensure that the Network is capable of accommodating such vehicles. (iii)
Therefore, any costs attributable to NR placing the Network in such
condition that it can accommodate vehicles listed without restriction in the
Sectional Appendix are not costs “which can reasonably be expected to be
incurred by [NR]…as a consequence of the implementation of the proposed
change”[Network Code Condition F3.2] (iv)
Since Class 142s are listed without restrictions for the relevant
routes, NR is not entitled to compensation under Condition F3.2 for the
Vehicle Change. (v)
ORR accepts that the situation may be different where it is proposed
to introduce vehicles which are not listed without restriction and where
their introduction may require, for example, line speed enhancements or
platform alterations. In such
circumstances, the costs of such changes might have to be borne by the
operator”[ORR determination para.56]. At para 58 ORR
concludes that “As concluded above
in para 56 ORR is of the view that NR is not entitled to compensation in this
instance”. [Persons consulting this
Directory will need to decide for themselves whether or not the reasoning
advanced by ORR supersedes or enfolds, that advanced by the Panel, in
relation to other specific cases] |
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Network Code Section |
Determination |
Date of Hearing |
Points made within Determination (Verbatim extracts given in Italics, or between “quotes”) |
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Network Code Section |
Determination |
Date of Hearing |
Points made within Determination (Verbatim extracts given in Italics, or between “quotes”) |
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15.4.
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Network Code Section |
Determination |
Date of Hearing |
Points made within Determination (Verbatim extracts given in Italics, or between “quotes”) |
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