[Committees (Access Dispute Resolution Committee & NVC) have had to consider a number of cases where one party contends that an issue ought to be handled under Track Access Condition G Network Change, and the other maintains that it does not merit this. Therefore:]

The Committee … considered that Part G of the [Network Code] provides for either party Train Operator or [Network Rail] to bring a matter into the jurisdiction of Part G of the [Network Code]. [Network Code] had obligations in relation to the discharge of Condition G1. The Committee was of the view that the force of Condition G2 and G2.1.1(ii) and (iii) in particular, is that, if a Train Operator considered that it was faced with a change, it could cause that implementation of that change be made subject to the provisions of Part G of the [Network Code].

In other words the Committee was of the view that it was the operation of Part G of the [Network Code], including where necessary reference under Condition [G11] to the [relevant ADRR Panel], that would determine the materiality of the change.

(AD1)

[The relevant Network Change was proposed in January 2013 and this hearing took place in October 2013. During the hearing, the Hearing Chair proposed to ask the Dispute Parties to provide further information. Network Rail contended that the process provided plenty of opportunity for all this to have been done, and that rules of law, the Human Rights Act, etc. meant that it might not be fair process to now adjourn the Hearing to require further information. The Hearing Chair replied that the ADRR procedure allowed the Hearing Chair to request further information; this was permitted and envisaged under the Rules. Further:]

I considered it necessary for a fair and competent determination of the issues in dispute to exercise the power afforded by the ADRR to require this further information.

(ADA17, paras 5.93, 6.29)

[The Part D and Part G processes are not linked or chronologically interdependent.]

(ADA17, para 6.6)

With regard to “a change to the Network” the Committee took particular account of the fact that there is no presumption in the definition that the change itself is anything major; indeed, the notes supporting the Regulator’s decisions in respect of the re-issue of the Track Access Conditions in 1995 state “we have deleted the word “material” the first time it appears: the key point is whether the effect is material, not the change itself”…

In relation therefore to all these considerations, the Committee offered the following summary of its position in relation to “Network Change”, in terms of Condition G definition [(a)(i)]:

• the Network is that which Railtrack supplies to Train Operators to allow them to operate services in fulfilment of their rights (including Firm Contractual Rights) expressed in their Track Access Agreements;

• Railtrack, as the “operator of the Network” must carry out all such tasks as it deems necessary to ensure that the Network is sustained at the level where Train Operators can operate services in fulfilment of the rights (including Firm Contractual Rights) expressed in their Track Access Agreements;

• the manner in which Railtrack carries out, or varies the carrying out of, the “operation of the Network” is a matter for its discretion, provided only that it accepts that it is accountable where the exercise of that discretion may have an impact on a Train Operator;

• if, whether at the time of a change or at a later date, the Train Operator is confronted by changed circumstances, such that, for a prolonged period, the Network is no longer sustained at the level where the Train Operator can operate services in fulfilment of the rights (including Firm Contractual Rights) expressed in its Track Access Agreement, then, given that the changed circumstances “materially … affect the operation of the Network, or of trains operated by that operator on the Network”, it is reasonable to conclude that the Train Operator has been the recipient (or victim) of a “Network Change”, in terms of Condition G definition [(a)(i]).

(NV33, paras 11, 14)

Some aspects of determination NV33 were appealed to the Regulator, who handed down his judgement in June 2004. As regards the findings of NV33 reproduced elsewhere on this site, these were not affected by the Regulator’s findings.

However, the Regulator did lay down, in the context where he had been asked to assume that GNER “was able to prove what it alleged”, and therefore “whether, on those assumed facts, Network Rail had carried out, or allowed to occur a change to the network without following the established procedures – in Part G of the network code – for the authorisation of such changes” that

1. A deterioration of the condition of the network is capable of qualifying as a change to any part of the network within the meaning of [Network Change definition (a)] of Part G of the Network Code.

2. The alleged changes in Raitrack’s policies and/or practices for maintaining, renewing, monitoring, and inspecting the infrastructure were both individually and in combination capable of amounting to “changes to the operation of the Network … or a series of such changes” within the meaning of [Network Change definition (a)] of Part G.

3. Railtrack’s programme of track and other infrastructure renewal after the Hatfield derailment was capable of amounting to a “change … to … any part of the Network” within the meaning of. [Network Change definition (a)] of Part G.

(ORR appeal of NV33)

This determination explored the definition of “Network Change” at length and is worth reading in full.

(ADA07)

[The ADP40 Panel was not unanimous in its decision and the Hearing Chairman made his own determination of the answers to the below questions. That determination was appealed to the ORR, and its conclusions are replicated below.]

The Panel members were agreed that the question is whether the changes of which FSR complain fall within paragraph (b) of the definition of Network Change. They do, and therefore amount to a Network Change if, but only if, three conditions are satisfied –

• they must involve a “change in the operation of the Network”, being a change not falling within paragraph (a);

• they must be “likely materially to affect the operation of trains operated by” FSR on the Network; and

• they must have lasted or be likely to last for more than six months.

The Panel noted that in Network Rail Infrastructure Limited v. Great North Eastern Railway Limited the Rail Regulator determined that “The alleged changes in Railtrack’s policies and/or practices for maintaining, renewing, monitoring and inspecting the infrastructure were both individually and in combination capable of amounting to “changes to the operation of the Network … or a series of such change.

(ADP40, paras 19, 20)

[ORR’s conclusions on the meaning of “the operation of the Network”:]

… ORR has concluded that it is clear that the ordinary and natural meaning of the words requires the ‘operation of the network’ to be understood in a general sense and in context. To fall within this limb of the definition, a ‘change’ to that operation, whether it be a decision or activity, must affect the running of the network in a practical sense and in some appreciable manner, which departs from the normal variations experienced on a regular, day-to- day basis. For that reason, while NR’s approach to the first limb is unduly narrow in its understanding of ‘change,’ FSR’s approach, which does not adopt an overview of the ‘operation of the network’ is too broad, as its responses to some of the hypothetical examples indicated. For example, in all examples, it considered the rescheduling of the same maintenance to be encompassed by the definition.

ORR recognises that establishment of whether or not a particular change does amount to a departure from the normal running of the network so as to satisfy the first limb of the definition will involve a degree of judgment and will depend very much on the particular facts effect on the operation of the trains in question, since the diversion necessitated the use of a completely different route, the omission of stations, different route knowledge and the use of two locomotives to enable entry into Euston statlon” It also considered the fact that the operation of trains on the diversionary route cost FSR up to £250,000 more per year to be a relevant factor in the assessment of materiality, irrespective of whether that cost could be compensated under Schedule 4 or not.

[ORR’s analysis and conclusions on the concept of materiality in “likely materially to affect the operation of trains operated by…that Access Beneficiary on the Network;”:]

… ORR agrees with FSR that the requirement is for there to be a ‘material effect’ on the operation of trains rather than an effect on a material number of trains. Beyond that, however, there is no more prescriptive guidance as to materiality expressly provided by the contractual wording.

Both parties were agreed that in this context, ‘material’ means an effect which is not insignificant and more than trivial. ORR agrees with that approach. However, this does not provide a full guide to the meaning of the word for the purposes of the definition, as the word needs to be interpreted in context. The definition requires the change materially to affect trains operated by a particular operator. ORR considers the assessment of whether that test is satisfied to involve an assessment of the extent of the impact of a change on the operation of those trains affected by that change, in the wider context of the trains or service operated by that operator. It follows that consideration of whether the effect is indeed material will depend very much on the facts of each case.

In the present case, ORR considers that the diversion of a weekend sleeper service (consisting of four trains, two in each direction) via a completely different route, with the consequent requirement for different route knowledge and a different locomotive formation and the inability to provide a service for customers (some of whom would be regular customers on a sleeper service) at the intermediate stations, at an additional cost to FSR of up to £250,000 are all factors which would support a conclusion that the effect of this particular change on trains operated by FSR was material.

Further, it should be noted that, in ORR’s view, there is a qualitative and not merely numerical aspect to consideration of materiality. As was argued at the hearing, certain services may be of such significance or uniqueness that, although they might represent a small proportion of the overall number of services operated, the effect of their alteration or cancellation would be disproportionate to the percentage of overall services which they represent. If this is the case, it would have a bearing on the assessment of the materiality of the effect of any change.2o In the present case, ORR is persuaded that the weekend sleeper services affected do possess such a significance.

Against that, ORR has also considered those factors which do not support a finding of materiality in the present case: in particular, the fact that only two trains in each direction per week, representing only 4.5% of FSR’s total sleeper services, are affected and that, as FSR admitted, a limited number of passengers use the intermediate stations omitted as a result of the diversion. Further, the diversion does not result in a breach of FSR’s Service Level Commitment in its franchise.

The assessment of whether a change is material involves an exercise of judgment. Taking all relevant information into account and having regard to the competing factors, ORR considers that the factors in paragraphs 53 and 54 above outweigh the factors in paragraph 55 and concludes that, in the present case, the change from single to double line block closures is indeed ‘likely materially to affect the operation of trains’ operated by FSR.

[ORR’s analysis and conclusions on the concept of durability in the context of “has lasted or is likely to last for more than six months”:]

ORR is not satisfied that NR’s approach to this limb of the definition is correct. There is nothing on the face of the wording to support the implication of a requirement of continuity. The definition simply refers to a change which has lasted or is likely to last for more than six months. This is clearly a phrase which concerns overall duration. Further, the overall duration is that of the ‘change’ in question. The duration is not simply linked to the carrying out of any discrete activity. Therefore, where the change which has an impact on an operator is one of policy or instruction, the change will begin when the policy comes into effect and will end when the policy ceases to have effect.

Further, the wording of the provision does not support an artificial limitation of that duration to one timetable period. If the overall duration is known to be likely to amount to a number of years or the foreseeable future, this is the period of time for which the change, on its natural and ordinary meaning of the words ‘is likely to last.’

Therefore, ORR concludes that, in the present case, the change to the pattern of possessions from single to double line blocks is one which ‘has lasted’ or is ‘likely to last’ for more than six months.

Applying the analysis in paragraph 64, the change started when the plan to continue to take the possessions (after the completion of the WCML project) came into effect. The parties are agreed that NR’s plan is intended to last ‘for the foreseeable future,’ and it is, therefore, likely to last for more than six months. The argument before ORR focused on whether or not any change was ‘likely to last’ more than six months. However, ORR notes that, on its analysis of the application of this limb of the definition, the period of change has already lasted for six months.

It follows from the above analysis that the change from single to double line blocks under consideration in this appeal does satisfy the definition of ‘Network Change’ as set out in the Code. However, it should also be clear from the above analysis, that this is a decision which turns on its facts. The definition needs to be applied to cases on an individual basis. It is not a definition which clearly excludes or includes certain categories or types of ‘change’ based on the type of activity, whether that change involves delivery of maintenance, or similar criteria. It is one which includes only changes which have an impact on an operator in a way which goes beyond the usual fluctuations in capacity, availability or condition inherent in the usual operation of the network.

(ORR appeal of ADP40 and TTP317, paras 47, 48, 51 to 55, 64 to 68)

[The Train Operator sought to represent to the Network & Vehicle Change Committee that occasional, but severe, disruption to services to permit the implementation of a changed method of painting for the maintenance of the Forth Bridge, constituted a Network Change. The Committee took the view that the nature and duration of the interruptions were such that they were not likely, in the generality, “materially to affect the operation of the Network, or of trains operated by that operator on the Network”. In other words the arrangements did not fulfil the criteria in definition (i). By the same token, such intermittent and occasional interruptions could not reasonably be deemed to have the continuity of material impact that might fulfil the condition (“lasted for more than six months”) to qualify under definition (iii). Thus:]

In considering whether or not the revised Forth Bridge repainting should be categorised as Network Change, the Committee adopted the following rationale:

• The change is essentially the introduction of a new technique that Network Rail is to employ to assure the long-term availability of the Forth Bridge for “trains operated by that operator on the Network”.

• Whilst the essence of what is under consideration can broadly be described as “painting” the change of technique does require some changes to possessions, as compared with past general practice. However, those changes to possessions relate only to the period of implementation of the technique: once the three coat epoxy resin paint has been applied and established, its subsequent maintenance (namely over-painting of topcoat) should be, broadly, only as disruptive as previous painting.

• Other than during brief parts of the period of transition, the functionality of the Forth Bridge, the hours that it will normally be open during the week, and the number, or weight, of trains that can be passed, will be neither reduced nor enhanced to any perceptible degree that might be categorised as “likely materially to affect the operation of the Network, or of trains operated by that operator on the Network” (Part G Definition (i)).

• Although, during the implementation of the new system of painting, there is a requirement, both past, and in the remainder of the seven-year contract, to take extended possessions, these are intermittent, and liable to careful scheduling and planning. It would not be appropriate to seek to classify such occasional interruptions as “a change… which has lasted for more than six months…and which is likely materially to affect the operation of trains by that operator on the Network” (Part G Definition (iii)) because there is no continuity of material impact. (Indeed for the great majority of any possible six-month period, there will be no impact on train operation at all).

On the basis of the findings of fact, and the rationale set out above, the Committee determined that it would be unreasonable to classify the revised Forth Bridge repainting as a Network Change, whether in the terms of Part G Definition (i), or Definition (iii).

(NV53, paras 7, 8)

[Previous definition related to “the format of any operational documentation”. Three early determinations focussed on this aspect of the definition. One (NV4) remains pertinent to the revised definition:]

The Committee, in considering whether an operating instruction might be a Network Change, concluded that a change to the substance (as opposed to the format) of an operating instruction cannot in itself constitute a Network Change.

(NV4, para 2)

The obligation of NR is to explain, but not justify, the proposed Network Change. In … order to explain the effect of Network Change, there must be an analysis … It is fundamental in that analysis that future committed and funded projects must be taken into account if the full effect of that change is to be understood, accepting that there must be due regard to the level of knowledge of those likely to be affected by that change.

(ADA16, para 5.32)

The Committee has commented that the force of Conditions [G1.9] and [G1.10] is that they give Network Rail specific opportunities, in defined circumstances, to avoid (G1.8), or to delay (G1.9) invoking Condition G1.1. In each case this freedom, intended to relieve NRI of unnecessary bureaucracy, is subject to constraints to discourage abuse.

The Committee asserted that recourse to [G1.9] or [G1.10] was to be considered as a concession only justified where strict application of G1.1 would imply undue delay, or would be inappropriate to a genuinely temporary change.

(NV4)

ORR would emphasise that NR’s obligation, as set out in Condition G1.1, which is stated to be subject to Conditions G1.9 and G1.10, is to give notice of its proposal for change if it wishes to make a Network Change. Condition G1.9 makes that general obligation of prospective notification conditional in the circumstances set out in the condition where the Change falls within paragraph (b) of the definition of Network Change. However, the present case does not concern prospective notification. Further, as set out in paragraph 69, ORR understands NR to accept that if a finding is made that the change to the pattern of possessions in question amounts to a ‘Network Change’, the Part G process must apply.

(ORR appeal of ADP40, para 71)

[Some aspects of determination NV33 were appealed to the Regulator, who handed down his judgment in June 2004. As regards the provisions of NV33 reproduced here, these were not affected by the Regulator’s findings.

However, the Regulator laid down that: Compensation in respect of a Network Change [Network Change definition (b)] is payable, where the change to the operation of the network has lasted for more than six months, for the full period following implementation of the change. This aspect of the Regulator’s judgment overturned the previous determination NV1, repeated in NV33, which had taken a different view. NV33 concluded:]

… Condition [G1.10]

• does not modify or expand the scope of the Condition G definitions: any action taken on safety grounds will be a Network Change if it fulfils the tests within “Network Change”, in terms of Condition G definition (i)(a) or (b), but will not be a Network Change if it does not;

• does not modify or reduce Railtrack’s obligation ultimately to carry out the consultative, and, where relevant, the compensation, provisions of Track Access Conditions G1 and G2, in relation to any change for safety reasons that fulfils the definition of Network Change;

• does not change the date from which any assessed compensation is payable, which is the date from which the action deemed to be a Network Change was first taken.

[In relation to Track Access Condition G1.10] actions taken by Railtrack … for reasons of safety qualify as Network Change only if they qualify in respect of their fulfilment of “Network Change”, in terms of Condition G definition (i)(a) or (b): the force of Track Access Condition [G1.10] does not change these definitions.

(NV33, paras 23.1, 24.3)

A plain reading of Condition G2.1 does not assist in understanding the time frame that has to be addressed in considering whether the proposed change would result in material deterioration in the performance of that Beneficiary’s trains. It may not be a matter of any significance because G2.1.1(a)(iv) clearly requires an examination by the Access Beneficiary of the future use of the relevant part of the Network; such use does not necessarily have to be use by that Access Beneficiary itself.

(ADA16, para 5.37)

… questioning the “motivation” of NR was not an admissible ground of objection to a properly constituted Network Change proposal.

(ADA17, para 6.2)

[Committees (Access Dispute Resolution Committee & NVC) have had to consider a number of cases where one party contends that an issue ought to be handled under Track Access Condition G Network Change, and the other maintains that it does not merit this. AD1 concluded (later repeated in NV55 and ADA24):]

The Committee … considered that Part G of the [Network Code] provides for either party Train Operator or [Network Rail] to bring a matter into the jurisdiction of Part G of the [Network Code]. [Network Code] had obligations in relation to the discharge of Condition G1. The Committee was of the view that the force of Condition G2 and G2.1.1(ii) and (iii) in particular, is that, if a Train Operator considered that it was faced with a change, it could cause that implementation of that change be made subject to the provisions of Part G of the [Network Code].

In other words the Committee was of the view that it was the operation of Part G of the [Network Code], including where necessary reference under Condition [G10] to the [relevant ADRR Panel], that would determine the materiality of the change.

(AD1)

[Where a Train Operator wishes to contest a Network Change, there needs to be adequate cause and supporting reasoning for such a contest, all submitted in accordance with due process. Thus:]

Condition G2.1 prescribes that “the Train Operator shall give notice to [Network Rail]” in a number of specifically defined instances. This is the mechanism by which the Train Operator is enabled to protect its own interest, provided it is done in a way that complies with the Condition, both as to content, and timeliness.

In this case, the terms in which the objections or statements, as prescribed in Condition G2.1 (a) or (b), had been expressed by the Train Operators were largely general, and did not “contain such detail as is reasonable to enable [Network Rail] to assess the merits of the Train Operator’s decision”. In particular,

• no instances were advanced as evidence that “the implementation of the proposed change would necessarily result in [Network Rail] breaching an access contract to which that Train Operator is a party” (Access Condition G2.1(a)(i));

• no instances were advanced as evidence that “[Network Rail] has failed….to provide sufficient particulars to that Train Operator…” (Access Condition G2.1(a)(ii));

• no instances were advanced as evidence that “the implementation of the proposed change would result in a material deterioration in the performance of that Train Operator’s trains which cannot adequately be compensated under this Condition G2 (Condition G2.1(a)(iii)); and

• no notice had been given in compliance with Condition G2.1(b) that any Train Operator “should be entitled to compensation from [Network Rail] for the consequences of the implementation of the change”.

[In this instance, which related to a proposal from Network Rail to close permanently the Goods loop at Ruscombe, the Committee gave fullest possible consideration to the substance of the arguments that were put before it, but concluded as follows:]

Taking all considerations into account, the Committee decided that, within the terms of the Track Access Conditions, no adequate demonstration had been made that any Train Operator had, or would, suffer detriment to a degree that gave the Committee grounds for ruling against Network Rail. In reaching that decision, the Committee sought to balance the following factors:

• There must always be great care taken in any decision that results in the reduction of Network capability, in particular in respect of facilities that can help to minimise the impact upon service perturbations. As a general rule facilities that are closed are unlikely to be easily re-instated. In the context of continuing performance problems on the GWML, Network Rail should be particularly mindful of the need to make a soundly based decision on such a matter.

• Whatever the merits of the particular case, Network Rail was to be commended on the fact that it was seeking to apply a structured approach to ensuring that S\&C renewal funds were deployed to best effect. The Network Change procedure is the prescribed means to ensure that the decisions consequent upon such an approach can be properly assessed, and, where appropriate, challenged and qualified.

• In respect of some elements of the freight operating constraints, namely the Rules of the Route/ Rules of the Plan, there is ample precedent, in the determinations of both this Committee, and of Timetabling Committee, that changes can be opposed, and overturned, but only on the basis that changes would infringe specific access rights. There is no precedent for challenging change in the generality.

• It would be illogical to treat other aspects of the freight operating constraints differently. At any time they are the product of past history and duly applied change procedures (Condition D or Condition G as appropriate), and any objection to change should logically require to be justified on the basis of identified specific impact on contractual rights. It cannot be right to challenge a Network Change solely on the grounds that it would result in change to the Network.

• Where no rights, or reasonably prospective rights, are infringed, it would be wrong to curb Network Rail’s freedom to exercise its discretion as to the detailed management of the Network, given that it is Network Rail that is the accountable body for both the efficiency and the safety of that Network.

The Committee therefore determined that:

• if Network Rail has satisfied itself that the closure of the Ruscombe Up Goods Loop is the best use of its resources, and that it is prepared to sustain any consequent performance risks, then it may proceed with the Network Change;

(NV58, paras 6.3, 6.4, 9, 10)

[This determination was subsequently made the subject of an appeal to the Office of Rail Regulation. The appeal was rejected in a judgement of 28th January 2005, and the determination of the Committee upheld.]

EWS’ view was that EWS (and other freight operators) had a permission to use the whole Network Rail network, contained in Clause 5 of their track access contracts. EWS considers that it could therefore prevent a Network Change by arguing under Condition G2.1(a)(i) that the implementation of the Network Change “would necessarily result in Network Rail breaching an access contract to which that Train Operator is a party”. EWS’s view was that such a right would however only be applicable in those circumstances ”where Network Rail proposes to amend the freight operating constraints in such a way that a freight operator believes that the Network Change will adversely affect the prospects of allowing its business to grow and evolve over time”. EWS said that, when it entered into its existing track access agreement, it did so “in expectation that the entirety of the contract would enable the business to grow and evolve in response to the changing nature of its customers requirements”. In this particular case, EWS believed that the removal of the loop would indeed have an adverse effect on its ability to grow and evolve its business.

EWS argued that the NVCC was wrong to conclude that “any objection to change should logically require to be justified only on the basis of identified specific impact on contractual rights rather than in the generality of rights” …

Under Clause 5.1 of EWS’ track access agreement, Network Rail grants EWS permission to use its network in accordance with the terms of the agreement. However, Clause 5.2 states that the permission to use the network shall, except where the context otherwise requires, be construed to mean permission, among other things, “to use the track comprised in the Network in accordance with the Network Code for the provision of the Services in accordance with their Service Characterisitcs and for any Alternative Train Slots, using the Registered Equipment in accordance with the Freight Operating Constraints … Clause 5.2 explicitly provides that the permission to use is subject “in each case and in all respects to the network code and the Freight Operating Constraints”.

ORR does not consider that EWS has demonstrated before the NVCC or in this appeal that the implementation of the proposed Network Change will necessarily result in a breach of its track access agreement. The expectations which EWS may have had when it entered into the contract … do not constitute contractual terms … ORR does not accept EWS’s interpretation of the permission to use clause and considers that it would lead to a perverse outcome because it would enable EWS and other freight operators) to prevent any Network Change taking place anywhere on the Network, irrespective of whether the operator had any specific rights on the route where a Network Change was being proposed.

The assessment above is consistent with the NVCC’s conclusion that “It cannot be right to challenge a Network Change solely on the grounds that it would result in change to the Network” (paragraph 9.4 of its determination). ORR therefore rejects this element of EWS’ appeal.

(ORR appeal of NV58, paras 17, 18, 20, 21, 22)

Limb (iii) requires that “the implementation of the proposed change would result in a material deterioration in the performance of that [i.e. the objecting] Access Beneficiary’s trains which cannot adequately be compensated under this Condition G2”. My analysis of this wording is that it calls for interpretation as to whether the reference is to the performance of current, historic or future trains. My conclusion is that it must refer to current trains, in the broad sense of the trains in the WTT current at the time of the dispute (including the immediately preceding subsidiary WTT) or the offered and agreed next WTT.

This is for two reasons. In the first place a “deterioration” in anything is inherently a relative concept which can sensibly be discerned only by reference to some currently existing or clearly ascertained benchmark from which to assess a change for the worse. Secondly, it was clearly the intent of the framers of the most recent version of Network Code Part G that the effect of a Network Change on possible future trains should be dealt with in any case by Limb (iv), which was newly introduced into Part G expressly for that purpose …

I am mindful that the … determination of dispute ADA16 approached this same issue on the equivocal supposition that Limb (iii) might possibly be applicable equally to current or future trains, but that in any event the analysis and findings as regards future trains would be identical under both limbs. That being so, I am content to conclude that Limb (iii) applies only to current trains and that it would be otiose here to consider expectations of future use at all under Limb (iii).

NR referred … to the determination in Dispute NV58, particularly paragraph 9.5 stating that “it would be wrong to curb Network Rail’s freedom to exercise its discretion as to the detailed management of the Network, given that it is Network Rail that is the accountable body for both the efficiency and safety of that network”. I must make it clear that I do not accept this determination, which is only of persuasive authority as regards an ADA … in advocating the attribution of any general discretion to NR to act as it sees fit in its general management of the Network because it has accountability for efficiency and safety. In my view Network Rail is accountable to its contracting partners, or customers, first and foremost to observe and perform to the letter its contractual commitments to them. These commitments include compliance with all provisions of the Network Code equally, and the Network Code includes provisions calculated sufficiently to promote efficiency and safety in balance with other considerations. I therefore reject any suggestion that NR has some kind of residual “freedom to exercise its discretion” in managing the network, whether based on efficiency, safety or any other general principle, such as to override or qualify the detail of its contractual obligations, even in what NR in its sole judgement perceives to be the more general interests of the industry … I take the same view as regards … citation of Dispute ADP13, which in turn relied on NV58.

(ADA17, paras 6.18, 6.19, 6.20, 6.22, 6.23)

[This case anticipated the provision, now included in the Network Code, for a Train Operator, (or Network Rail in G4.1 (a)(iv)) to contest a Network Change on the grounds that “the proposed change does not adequately take account of the reasonable expectations of the Train Operator as to the future use of the relevant part of the Network.”.

This case (which was introduced originally under [G10]) addresses questions of an operational Network Change that is tolerable in the short term, but has longer-term implications. The determination therefore upholds the view of the claimant that the Network Change (involving the curtailment of the operational length of Stowmarket loop) is not an acceptable final outcome.]

(NV22, NV57)

NR suggested … that the Committee in NV58 had carefully considered … future use … as was evidenced by the words “any Train Operator had, or would (my underlining) suffer detriment”. I approach that submission with some caution. The Network Code was amended on 12 January 2007 some two years after the Determination of NV58 by the inclusion of G2.1.1(a)(iv). In my view there is now a clear requirement which requires me to take into account the reasonable expectations of the Access Beneficiary as to the future use of the relevant part of the Network.

The reasonable expectations of the Access Beneficiary must include as a priority the running of an efficient service. I am satisfied that in seeking to run an efficient service the Access Beneficiary is entitled to have regard to the Network capacity available to it and others to recover from service disruption caused by a faulty train.

(ADA16, paras 5.7, 5.8, 5.50)

Condition G2.1.1(a)(iv) refers to the reasonable expectations of “the Access Beneficiary” as to “the future use of the relevant part of the Network” (my emphasis). This was clearly intended to mean expectations as to more than just that Access Beneficiary’s own trains. However … in order for the “expectations” of any one operator to be considered “reasonable” in this context, my view is that the future use expected, if it would or could be by someone else, must at least be somehow relevant to that operator and not just a matter concerning the world at large - and therefore that some connection at least would have to be demonstrated between any general forecast of future use and the individual operator’s intended business or operations. If it were otherwise, an individual operator could not itself reasonably hold any expectations at all of its own deriving from a general forecast.

The consequence in my view is that any one operator cannot make an individual case based only on an assumed general anticipated use of the relevant part of the Network, unless it has a genuine concrete expectation of itself needing to use it for the particular traffic as forecast. I recognise that freight operators will always find it difficult to establish individually with any certainty a specific anticipated contract pattern, since to a large extent they will be in competition with each other for available traffic. In that context I do not consider it necessary for the operator to show an actual present contract in order to demonstrate the future expectation, but in relying on industry wide forecasts it would at least need to show a genuine intention and capability of being active in that particular kind of business

I took “the relevant part of the Network” to mean not only the precise location or network assets directly physically affected by the proposed Network Change, but the routes and network assets on which there would clearly be a knock-on direct effect on the operation of trains resulting from the proposed Network Change, as a matter of necessary causation.

In trying to assess what might be considered appropriate in order to “adequately take account” of reasonable expectations I accept NR’s contention, based partly on precedent and partly on practicality, that a full Timetabling simulation should not be required. However I consider that merely dismissing expectations of use of a particular facility as being an unsupported “nice to have”, but on the basis of high level studies only with no or minimal detailed backup modelling or analysis, goes too far in the opposite direction. My view is that there is a middle ground; operators participating in this process are entitled to have taken into account by NR what is reasonably likely to be necessary to meet their genuine and demonstrably achievable aspirations, because that is what constitutes their reasonable expectations. Just as it is unreasonable to expect NR to undertake a detailed Timetable study as part of the Network Change process, it is also unreasonable to expect operators to have to go to the lengths of proving beyond doubt that everything they seek to be taken account of in assessing a Network Change is 100% guaranteed to be absolutely critical and essential to their future plans.

(ADA17, paras 6.26, 6.27, 6.28, 6.32)

[Although this determination was issued when a different version of Part G was in effect, the principle is still relevant. Which was that if, for any reason, the Train Operator does not furnish an estimate in accordance with [G2.1.1], which meets the criteria in [G2.1.2], then this is potentially a matter that can be referred for determination … If, in the absence of such reference, the parties proceed with the Network Change, and are subsequently unable either to agree sums of compensation due, the Committee’s [now forum’s] discretions in respect of any determination will be much informed by the quantity, quality, and timeliness of any information that may be generated to support the respective cases, and the extent of its compliance with the provisions of [G2.1].]

(NV44)

In this last respect, the Panel considered that a determination of what is “reasonable” had to take account of both the relevance of the proposal to the circumstances, and the manner in which the proposal has been made. The Panel noted that whilst Condition G2.2 gives an apparent scale to the level of compensation payable (“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 the Train Operator as a consequence of the implementation of the proposed change”) this is by way of qualification of “the compensation referred to in Condition G2.1”.

Condition G2.1 places on a Train Operator the obligation to give notice to Network Rail if it considers that “(b) it should be entitled to compensation from Network Rail for the consequences of the implementation of the Change”; and, “Any notice of the kind mentioned in paragraph (b) above shall include a statement of the amount of compensation required and the means by which the compensation should be paid, including any security or other assurances of payment which Network Rail should provide. Any such statement shall contain such detail as is reasonable to enable Network Rail to assess the merits of the Train Operator’s decision”.

In other words, whilst the Train Operator is the party both in a position to, and entitled to, make an assessment of what may be required by way of Bus Replacement services, the question of whether or not the costs of those Bus Replacement services are met by Network Rail depends on the (not unreasonable) “statement … to enable Network Rail to assess the merits of the Train Operator’s decision”.

Condition G2.4 lays down particular time limits where, if the Train Operator has presented a statement, Network Rail is obliged to pay the stated level of compensation, or take the matter for resolution by an Access Dispute Panel; failure in this respect would have the consequence that “ the proposed Network Change shall not be implemented”.

The practical impact of these provisions is that the parties are required to carry out full and prompt consultations, leading to agreement, before there can be a definitive outcome with respect to the payment of consultation, and/or the implementation of a scheme.

Consultations, as required by the terms of the Track Access Agreement and the Network Code may be facilitated by the existence of informal liaison structures. However, such informal arrangements cannot be adopted as a substitute for due compliance with contractual terms, in this case Conditions G2.1, G2.2 and G2.4.

(ADP08, paras 20, 21, 22, 23, 24, 25)

One of the rights which passed to [the TOC] pursuant to the Transfer Scheme was a right to make and pursue a claim for compensation under Network Code Condition G2.2 arising from the consequences of Network Change Notices …

(ADA29, para 7.1)

[The Committee was asked to interpret the force of the two factors explicitly to be taken into account in the calculation of compensation payable to a Train Operator under G1.2 and G2.1, namely “(a) the benefit (if any) to be obtained or likely in the future to be obtained by the Train Operator as a result of the proposed Network Change; and (b) the ability or likely future ability of the Train Operator to recoup any costs, losses and expenses from third parties including passengers and customers.”

In a case where the Train Operator had agreed to comply with G1.2 in respect of costs, but had declined to produce either an estimate, or a methodology for the current assessment of revenue losses, the Committee was clear that the assessment of benefit to a Train Operator should not be calculated as a NET benefit. In particular, benefits should not be discounted because an improvement to the Network also benefits a second Train Operator who might be minded to run competitive services, and capture revenue, or because running of accelerated or more frequent services, may incur additional costs. Thus:] “the decision whether or not to run such a service is, with the increased capacity now on offer, a matter for GNER to decide taking account of its own commercial interests.”

(NV44)

The Network and Vehicle Change Committee considered the extent to which imposition of a speed restriction constituted a Network Change, and the compensation that should in such circumstances be payable, in a circumstance where an element of the change (which was also associated with changes in Sectional Running Times) resulted from an intervention by the HSE in its role of “Competent Authority”. The Committee was at pains to differentiate between the proper discharge of safety responsibilities (including at the direction of a “Competent Authority”), and the scope for seeking commercial advantage in the name of safety management. It was not appropriate to seek to avoid payment of any compensation, by invoking [G9] (c), when much of the change did not fall into this category.

(NV15, NV16)

Network Rail referred … to the need for its Network Change proposal to be “established” as well as implemented. Network Code Part G refers to this concept only once, in the heading to Condition G10 - “Establishment and Implementation”, which by itself does not tell us what the word is intended to mean. If “establishment’” has any meaning distinct from implementation, it appears to be used in practice to mean the process of finally authorising or entitling the implementation of a proposed Network Change, and this is how I interpret it.

(ADA17, para 6.24)

I … reject … contentions that there could be no concept of partial implementation of a Network Change or that an exercise described repeatedly as mere “stageworks” (a procedure not known to the Network Code …) could not amount to such implementation. In any event it matters not whether the works involved amounted to a partial or total implementation. It cannot be necessary for an entire Network Change proposal to be the subject of operators’ objections in order for only some part of it to be modified, withdrawn or disputed; therefore it cannot be necessary for the totality of works required by the proposal to be completed before this can amount to implementation.

Accordingly I find as a fact that the … Network Change has been implemented by NR by virtue of the “plain lining” works carried out … notwithstanding their appellation by NR as “stageworks”. I also find as a matter of contract interpretation that such implementation constituted a breach of Condition G10.3.1.

(ADA17, paras 6.12, 6.13)

The Appeal process … is for use in the event of a dispute or in the event of failure by a party to invoke the processes in a proper or timely manner. Parties should not be afraid to invoke Condition [G11]. Nor should they delay unduly before they invoke it, because the Committee will not hasten to reach a decision or come to a hurried injunctive decision where time is running out and the parties have clearly prevaricated for a period of months before making a reference to the NVC.

The ADRC has taken the view that, if a party considers that a change is sufficiently material to warrant tabling by the other party under either Condition G1 or G3, then it has the opportunity under Conditions G2.1(a) or G4.1(a) respectively to cause the processes in Part G of the Access Conditions to be invoked and brought into play.

[The findings of AD1 were restated in NV55 in relation to an assertion by Network Rail that an extension of the duration of “2 Track Railway timetable” on the GWML was a matter solely for Rules of the Route/ Rules of the Plan. “Part G of the Access Conditions provides for either party, Train Operator or Railtrack, to bring the matter into the jurisdiction of Part G of the Access Conditions. Railtrack had obligations in relation to the discharge of Condition G1. The Committee was of the view that the force of Condition G2, and G2.1a(ii) and (iii) in particular, is that, if a Train Operator considered that it was faced with a change, it could cause that implementation of that change be made subject to the provisions of Part G of the Access Conditions.

In other words the Committee was of the view that it was the operation of the Access Conditions, including where necessary a reference under Condition [G11] to [appeal], that would determine the materiality of the change. It was not open to any party to keep a proposal for change outside the formal processes of Part G unless all parties agreed.]

(AD1, NV55)

[Some aspects of determination NV33 were appealed to the Regulator, who handed down his judgment in June 2004. As regards the deliberations of NV33 reproduced here, these were not affected by the Regulator’s findings.]

In making a direction to Network Rail to bring forward a Network Change proposal the Committee “stressed that it is only a direction to the parties as to the procedure (Access Condition Part G) with which they must conform. Any other considerations, such as the actual scale of material hurt, or benefit, to any Access Party, would only come within the jurisdiction of this Committee if, the laid down procedure having been complied with, the parties are unable to agree, and a further reference is made in accordance with Track Access Condition [G11]”.

(NV53)

[Adoption of the Part G process allows the issues of materiality to be quantified and reviewed. It is designed as a helpful process for notification of change and as a mechanism for compensation to be claimed where appropriate. Thus:]

[the Committee] encouraged parties to treat the provisions of Track Access Condition G as a facilitational process. That said, the invoking of the procedure by either party does not immediately imply that a mooted change IS a Network Change. Similarly, should it be determined (either by the parties, or by reference to this Committee) that the change in question does fulfil a definition of Network Change, there must be a presumption that, even so, the scale of compensation that one party may be required to pay to another is also subject to tests of materiality and reasonableness.

(NV33, para 5.1)

[In other words invoking the procedure is not to judge the issue. It is open to the parties (or the Committee) to conclude that the matter in question is NOT a Network Change; or that, if it is a Network Change, it is one that does not attract any compensation.]