Template Format for a Joint Reference submission …... · Web viewIn relation to the statement set out in 4.2 by Grand Central in its Statement of Claim, Network Rail disagrees with

Response Statement

by the

Grand Central Railway Company Limited

in relation to formal dispute numbered ADA31against

Network Rail Infrastructure Limited

1

1 DETAILS OF PARTIES

1. The names and addresses of the parties to the reference are as follows:-

(a) GRAND CENTRAL RAILWAY COMPANY LIMITED whose Registered Office is at 1

Admiral Way, Doxford International Business Park, Sunderland SR3 3XP. ("Grand

Central") ("the Claimant")); and

(b) NETWORK RAIL INFRASTRUCTURE LIMITED, whose Registered Office is at 1

Eversholt Street, London, NW1 2DN (“Network Rail”) ("the Defendant")).

(c) All correspondence relating to this dispute to be sent to:

Grand Central

Jonathan Cooper at : [email protected]

Mark Robinson at : [email protected]

2

2 INTRODUCTION

This document has been prepared as a response to Network Rail’s Statement of Defence in relation to

ADA31. In this document Grand Central has referred to the statements made by Network Rail and

provided comments and clarification points.

3 SUMMARYGrand Central's case is based upon the following:

A. There was no agreement or any discussion on compensation arrangements prior to the

emergency timetable being introduced. There was no agreement on how the affected trains

would be coded in systems. Network Rail has acted on its own initiative.

B. Network Rail believe that no compensation is due to Grand Central as the emergency timetable

was a Restriction of Use. Grand Central dispute this view and have asked for evidence from

Network Rail that the timetable was uploaded into the train service database by 22:00 the day

before to be classed as a Restriction of Use. When asked, Network Rail were unable to

evidence that the revised timetable was uploaded before 22:00 on 26th December and were

therefore unable to confirm that the revised timetable should be classed as the Applicable

Timetable. Grand Central argue that not only was there no discussion about compensation

arrangements, they also dispute Network Rail’s view as the emergency timetable being a

Restriction of Use. Grand Central believe the emergency timetable was uploaded shortly

before 22:27 on the 26th December 2014.

C. Grand Central will argue that there has been a breach of contract by Network Rail failing to

provide access.

D. Furthermore Grand Central will argue that Network Rail has not acted in good faith in trying to

resolve this matter after the emergency timetable was implemented.

E. Grand Central will cite as evidence as a lack of good faith Network Rail’s failure to respond to

two formal letters that were sent with clearly defined timescales. Network Rail ignored the

Letter Before Claim sent by Grand Central and did not act until a complaint was made.

4 COMMENTS AND CLARIFICATION ON NETWORK RAIL’S STATEMENT OF DEFENCE

3

In this section we have highlighted areas where Grand Central disagree with Network Rail’s Statement

of Defence.

Network

Rail

reference

Comment by Network Rail Grand Central Response

4(A) SUBJECT MATTER OF DISPUTE

4(A) page 5

Following an incident near to Finsbury Park

on 26 December 2014 in relation to the

Christmas 2014 possession blockade,

Grand Central agreed to amend its services

further to allow the introduction of an

emergency timetable on 27 December

2014. Network Rail compensated Grand

Central in accordance with the provisions in

the contract (contained within Schedule 4

and Schedule 8).

Grand Central did agree to amend its

timetable further to assist Network Rail in

the creation of the emergency timetable.

However this agreement did not include

any discussion regarding compensation.

Grand Central has not agreed to waive its

schedule 8 compensation in relation to the

emergency timetable of the 27th

December 2014.

Grand Central disputes the statement that

“Network Rail has compensated Grand

Central in accordance with the provisions

of the contract”.

4(A) page 5

4.1: Network Rail disagrees that it is in

breach of contract of “Clause 4.2 “Good

faith” of the TAC”. Network Rail assumes

that use of the phrase “TAC” refers to the

contract.

The referral to “TAC” relates to “Track

Access Contract”

4(A) page 5

4.2: Network Rail disagrees with the use of

the word “refusal”.

Grand Central believes that the use of the

word “refusal” is the ideal word to use in

this context.

4(A) page 5

4.5: Network Rail disagrees that a failure to

provide access was a breach of Schedule 5

in the contract

Grand Central believes that a failure of

Network Rail to be able to provide access

to its Network is a breach of the contract.

4

4(A) page 5

4.6: Network Rail disagrees that Network

Rail’s “P coding” resulted “in Grand Central

not receiving any compensation for the

emergency timetable through schedule 8

Grand Central notes that the effect of “P”

coding services removes these from the

downstream performance payment

systems resulting in Network Rail not

compensating Grand Central for the

emergency timetable alterations of the

27th December 2014.

Grand Central argues that Network Rail

has no agreement to “P” code these

services and that there is no requirement

under Part H of the Network Code.

Grand Central also argues that under

Para 5.2.2 of Part H (see Appendix 13 of

Network Rail’s Statement of Defence at

page 176 that Network Rail is under an

obligation to consider the impact of the

emergency timetable on Train Operators.

Para 5.22 states Network Rail must have

“regard to the feasibility of implementation

insofar as it impacts on Affected Train

Operators). The impact to Grand Central

was significant in terms of impact on our

passengers and the financial impact.

4(A) page 5

4.7: Network Rail disagrees that “the coding

of the services as “P” was not discussed at

the teleconferences and hence no

agreement was reached on compensation”.

Grand Central maintains that there was no

discussion on how compensation

arrangements would be made until after

the event. Network Rail also states in

paragraph 1 of page 12 of its Statement of

Defence “The Network Rail Route Control

Manager has confirmed that

compensation arrangements are never

discussed as there is no requirement to

do so”. It is clear from this statement that

5

neither party has agreed what

compensation arrangements would be in

place.

Grand Central agreed to an emergency

timetable not to an agreement to waive its

right to compensation.

4(A) page 6

4.8: Network Rail does not understand

Grand Central’s point. This may be due to

there being two sentences instead of one.

Grand Central has stated in its Statement

of Claim

“4.8 Grand Central maintains that as no

agreement was reached on

compensation. The default position is that

compensation to Grand Central should

have been via schedule 8”

This should have read:

““4.8 Grand Central maintains that as no

agreement was reached on

compensation, the default position is that

compensation to Grand Central should

have been via schedule 8”

Grand Central argues that in the absence

of any agreement on compensation

arrangements for the emergency

timetable being implemented, Network

Rail did not have the right to refuse to pay

compensation under schedule 8.

4(A) page 6

4.9: Network Rail is in disagreement with

the words chosen.

Grand Central notes this but would like to

understand what the words are that

Network Rail is in disagreement with.

4(A) page 6

4.10: Network Rail is in disagreement with

the words chosen. Grand Central has


understand what the words are that

6

obligations under Part H of the Network

Code and verbatim from Part H are listed in

Appendix 13 of this Statement of Defence.

Network Rail is in disagreement with.

With regard to Grand Central’s obligations

under Part H. We are full aware of these

obligations and have shown full

compliance particularly in relation to

development of the emergency timetable

for Finsbury Park. Operators can refuse

to agreement of an emergency timetable.

4(A) page 6

4.13: Network Rail disagrees with Grand

Central that Network Rail was in agreement

that compensation should be paid to Grand

Central for agreeing to the emergency

timetable

Grand Central notes this statement.

However, this statement is at odds with

the actions of the NR LNE route team who

have been sympathetic and have tried to

pursue compensation. In addition at level

1 meetings with the LNE team they have

presented a case that they were in

agreement with Grand Central and that it

was only the CCG panel that was refusing

to compensate.

In addition see Appendix 4 Paragraph 13

of Grand Central’s Statement of Claim.

Where Network Rail states the “… LNE

and EM route were supportive of an extra

contractual payment to Grand central”.

4(A) page 6

4.14: Network Rail disagrees with Grand

Central’s statement.


understand what the area of disagreement

is.

4(A) page 6

4.15: Network Rail does not agree that it did

not respond until a “compolaint” was made.

Grand Central has tried to resolve the

claim amicably and to avoid a formal

dispute.

Unfortunately, Network Rail did not

respond to the Letter before Claim or the

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offer of mediation in letters dated 9th May

2016 and 12th September 2016 until a

complaint was made to Network Rail on

the 26th October 2016 (Appendix 4 of the

Grand Central’s Statement of Claim). It

was only at this stage that Network Rail

responded.

4(A) page 6

4.17: Network Rail responded formally on

27 October 2016

This appears to be an error. For clarity

only one response was made by Network

Rail on the 27th October 2016.

4(A) page 6

4.19: Network Rail disagrees with this

statement.


understand what the area of disagreement

is.

4(A) page 6

4.20 Part a): refers to an email from Grand

Central to Network Rail dated 5 January

2015 and Network Rail disagrees with the

following words stated by Grand Central:

“receiving nothing from you to reflect the

massive impact inflicted on our

operation…”.

Grand Central notes that at the time this

was the case. Grand Central had not

received any compensation associated

with the implementation of the Emergency

Timetable.

Grand Central also note it has taken

nearly two years to dispute this statement.

4(A) page 6

4.20 Part b): Network Rail notes that this is

referring to 9th May 2016.

Agreed

4(A) page 6

4.20 Part (c): fails to point out that Network

Rail did respond and provide information

following the 9 May 2016 letter.

Part (d): fails to point out that Network Rail

did respond and provide information

following formal letters of Grand Central.

Grand Central has simply listed the

documents that it has provided. The

response from Network Rail has been

listed in 4.20 e). Grand Central is not

suggesting that Network Rail did not

provide a response – the descriptions in

4.20 c) and d) are simply descriptions of

the letters contained in the Statement of

Claim.

With regard to Network Rail’s response of

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the 27th October 2016:









responded.

In any event the Letter Before Claim was

made under the Civil Procedure Rules

and Network Rail was made clear of this

fact. It chose simply to ignore the CPR

timescales and the letter until the

complaint.

4(A) page 7

4.20 Part (f): the Appendix 6 mentioned

fails to list the entire clause 5 of the contract

(PERMISSION TO USE) as clauses 5.3 to

5.8 are missing. Network Rail provides the

full version of clause 5 of the contract in


Grand Central has provided extracts of

clause 5 of the contract so as to focus on

the relevant parts of the contract. In this

case we have not supplied clauses 5.3 to

5.8 as they do not form part of our case.

This is in accordance with Access Dispute

Resolution Rule G16(a)(ix) and the

guidance given in the template Statement

of Claim which states:

“Copies of the following documents …

shall be annexed and cross referenced to

the statement:

A) the relevant extracts of

contractual Documents containing

the provision(s) under which the

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referral to the ADA arises and/or

provision(s) associated with the

substance of the dispute;”

4(A) page 7

4.20 Part (g): Appendix 7 mentioned is not

the relevant copy of Schedule 5 that was in

place on 27 December 2014. The Schedule

5 listed in Grand Central’s Statement of

Claim includes the third supplemental

agreement that was Office of Rail and Road

(ORR) approved on 7 August 2015. The

correct copy of the contract that was live on

27 December 2014 included the first

supplemental agreement which had an

effective date of 00:01 on 14 September

2014 and was entered into pursuant to the

Passenger Access (Short Term Timetable

and Miscellaneous Changes) General

Approval 2009. Network Rail provides the

applicable Schedule 5 that was live on 27

December 2014 in Appendix 11 of this

Statement of Defence.

Grand Central has provided a

consolidated copy of the schedule 5 as at

the 27th May 2016 from the ORR website.

The Third Supplemental agreement

amended the calling pattern table relevant

to Wakefield Kirkgate only. It has not

altered any of the relevant schedule 5

provisions relied upon by Grand Central in

its claim.

The First Supplemental agreement was

for changes to the Schedule 8 berthing

offsets at Hartlepool and Wakefield

Kirkgate. This has not amended schedule

5. Grand central has re-run its claim

based on the performance points in place

at the time. The claim amount is totally

unchanged based on the correction of

benchmarks (the third decimal point). It

changed the pennies and not the pounds

and the claimed for amount (note without

interest or costs which shows our

principled approach) is the same.

None of the supplemental amendments

identified by Network Rail change the

claim. We are content to use the version

of the Schedule 5 supplied by Network

Rail in its Statement of Defence.

4(A) page 8

4.20 Part (i): in the Appendix 9 mentioned,

Network Rail notes that clause 8.1 is

Agreed – there was a formatting error. We

are content to use the version supplied by

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incorrectly listed Network Rail in its Statement of Defence.

4.20 Part (j): in the Appendix 10 mentioned,

Network Rail disagrees with the claim laid

out. Network Rail notes that the

Performance Points listed in Grand

Central’s Appendix 10 are incorrect as the








Approval 2009. The first supplemental

agreement amended the Performance

Points in Appendix 1 to Schedule 8.

Network Rail provides the 1st supplemental

agreement that includes the applicable

Appendix 1 to Schedule 8 that was live on

27 December 2014 in Appendix 12 of this


We agree that Performance Points used

were not the ones in place at the time of

the incident. We have input the correct

Performance Points. The claim amount is

totally unchanged based on the correction

of benchmarks (the third decimal point). It





4(A) page 8

4.20 Part (k): in the Appendix 11 mentioned

Network Rail disagrees with the timeline of

events listed.

Grand Central notes that Network Rail has

not disputed the details of the issues

raised on the Grand Central timeline.

Network Rail has sought to add to this

timeline. Grand Central produced a

timeline covering the issues relevant to

the claim. We feel that many of the items

that Network Rail have suggested be

added to the timeline add very little.

However if Network Rail believe that the

items they have raised are relevant to the

claim and will make a material difference

11

we are happy to include these.

4(A) Page 10

This section is headed “In addition to the contract , the relevant contractual framework should also be included in the following:

4(A) Page 10

References are made to page 747 of the

PR13 final determination

Grand Central notes these references and

is fully aware of them. For clarity we are

in agreement with the statements made

as part of the periodic review. It would be

helpful for clarity if Network Rail would

highlight or extract the parts that are

relevant to their case.

5 EXPLANATION FROM THE DEFENDANT’S PERSPECTIVE OF EACH ISSUE IN DISPUTE

5.2 Issues where the Defendant qualifies or refutes the Claimant’s Case, and the reasons therefore.

5.2 page 11

In relation to the statement set out in 4.1 by

Grand Central in its Statement of Claim,

Network Rail disagrees that it is in breach

of contract of “Clause 4.2 “Good faith” of

the TAC”. Network Rail assumes that use of

the phrase “TAC” refers to the contract.

Network Rail disagrees that there had been

a “failure to pay Grand Central

compensation under schedule 8 or under

clause 8.2 of the TAC”. Grand Central

received from Network Rail a compensation

payment for unplanned disruption on 27

December 2014 in accordance with

Schedule 8 of the contract based on the

emergency timetable that was agreed and

The use of the term “TAC” is a term used

by the industry. Network Rail is safe to

assume it means contract. Specifically this

relates the Track Access Contract (TAC)

between Network Rail and Grand Central

dated 14th August 2014.

On the issue about compensation

received Grand Central accepts it has

received compensation under schedule 8

of the contract for the unplanned

disruption on the day. For clarity this was

12

so planned in advance. for unplanned disruption that was

measured against the emergency

timetable implemented on the 27th

December 2014.

Grand Centrals claim is in relation to the

impact of the Emergency Timetable

against the base timetable that was

agreed by Grand Central in September

2014. This base timetable included

engineering work agreed for week 40.

5.2 page 11



Network Rail disagrees with the use of the

word “refusal”. Network Rail and Grand

Central agreed to an emergency timetable

in advance of 27 December 2014 and

Network Rail compensated Grand Central

in accordance with the contract. Network

Rail has no obligation under the contract to

compensate Grand Central for agreeing to

amend its services.

Network Rail has refused to compensate

Grand Central for its agreement to

introduce the Emergency Timetable on

the 27th December 2014.

Grand Central agreed to introduce the

Emergency timetable at Network Rail’s

request and acted in good faith. At no

stage has discussion taken place about

compensation as part of the agreement to

the emergency timetable. At no stage

was any debate had about how the

implementation of the emergency

timetable and how it would impact on

Schedule 8 payments. Network Rail has

chosen to “switch off” the Schedule 8

payment for the introduction of the

emergency timetable without any

13

discussion or debate with Grand Central.

Grand Central clearly had an expectation

of compensation be that by way of

Schedule 8 or via clause 8.2 of the

contract. For clarity Grand Central agree

that under schedule 4 they would not have

been eligible for compensation. This is

how the Grand Central Schedule 4 works.

Network Rail believes that the only

payment mechanism is via schedule 4.

Grand Central do not agree.

5.2 page 11



Network Rail disagrees that a failure to

provide access was a breach of Schedule 5

in the contract. Grand Central and Network

Rail agreed an emergency timetable and

Grand Central were allowed to run the

services listed in the emergency timetable.

Grand Central believes that a failure by

Network Rail to provide access to the

network particularly without compensation

is a material breach of the contract.

Network Rail has a Track Access Contract

with Grand Central and it has failed to

provide the firm rights that support that

access.

Grand Central in effect had no choice to

do anything but agree to the emergency

timetable given the serious issues facing

Network Rail. This was done in good faith

to assist Network Rail. We believe that to

argue that agreement to the emergency

timetable in order to escape a claim of

compensation for breach is a further

example of a breach of good faith by

Network Rail especially given the nature

and seriousness of the incident that

Network Rail was facing.

14

5.2 page 11



Network Rail is in disagreement with Grand

Central that Network Rail’s “P coding”

resulted “in Grand Central not receiving any

compensation for the emergency timetable

through schedule 8”. Grand Central were

compensated in accordance with Schedule

8 (unplanned disruption the day) for the

emergency timetable agreed

Grand Central’s claim relates solely to the

lack of compensation for the introduction

of the emergency timetable. Grand

Central acknowledge that compensation

was paid for services that did not operate

to the emergency timetable schedule.

Grand Central did agree to the

introduction of the emergency timetable

but not at any point to how it would be

compensated. Network Rail has stated in






do so”. It is clear from this statement that

neither party has agreed what

compensation arrangements would be in

place for the emergency timetable.

5.2 page 11



Network Rail is in disagreement with Grand

Central that “the coding of the services as

“P” was not discussed at the

teleconferences and hence no agreement

was reached on compensation”. By Grand

Central agreeing to the emergency

timetable, Grand Central in effect agreed to

Network Rail P-coding services so that the

real time industry train running system

TRUST could be updated to reflect the

timetable agreed. Network Rail’s control

Grand Central does not accept the view

pursued by Network Rail that by agreeing

to an emergency timetable or “P coding”

that this is in effect automatic agreement

on compensation arrangements.

Grand Central maintains that no

discussion took place about compensation

arrangements nor was this the right place

or time to discuss this.

Grand Central does not agree where

Network Rail has stated “By Grand Central agreeing to the emergency timetable, Grand Central in effect agreed

15

centre staff undertook this in line with the

Network Rail standard “National Control

Instructions” (NCI). The NCI instructions

apply at all Network Rail Controls [ICCS]

and the National Operations Centre and in

addition they are available to Train

Operators. The Network Rail Route Control

Manager has confirmed that compensation

arrangements are never discussed as there

is no requirement to do so. Route Control

managers are responsible for making sure

the railway can operate as effectively as

possible on any given day and so operators

are contacted to make any arrangements

accordingly.

to Network Rail P-coding services so that the real time industry train running system TRUST could be updated to reflect the timetable agreed.”

Grand Central argues that the absence of

any discussion on compensation at the

emergency meeting does not mean that a

default position of no compensation is

agreed.

5.2 page 12



Network Rail does not understand Grand

Central’s point. Network Rail believes that

there was no requirement to agree bespoke

compensation arrangements as

compensation arrangements are listed in

the contract and these have been duly

followed, i.e. Grand Central did receive

compensation via Schedule 8 for the

emergency timetable that was agreed to

run on 27 December 2014.

Network Rails case is based on the

premise that agreement to the emergency

timetable results in no compensation

associated with its introduction. Grand

Central dispute this. There was no

agreement whatsoever on the

compensation arrangements associated

with the introduction of the emergency

timetable. Network Rail has stated in






do so”.

16

5.2 page 12



Network Rail is in disagreement with the

words chosen. Network Rail did “P” code

services following agreement from Grand

Central to do so. If Network Rail had not “P”

coded the relevant services then the real

time information system TRUST would not

have reflected the correct timetable that

was agreed.

For clarity Grand Central did not agree to

the “P” coding of the services. Grand

Central agreed to the implementation of

the emergency timetable.

We note the comments about the real

time information systems. However the

ORR review1 into the possession overruns

at Kings Cross and Finsbury Park noted:

“The late changes to the timetable caused incorrect information to be displayed on some information systems on the morning of 27 December. Reports also suggest that the information screens on stations were not keeping up with the changes to the service caused by further cancellations during the day. In some cases, a difference was noted in the information displayed on station screens and live information provided by train crew or station staff.

Grand Central believe that Network Rail

should not have “P” coded the services as

these would then have shown up in

passenger information systems as

cancelled. Because they were “P” coded

the train details simply vanished from the

system leaving passengers confused.

5.2 page 12

In relation to the statement set out in 4.10

by Grand Central in its Statement of Claim,

Network Rail is in disagreement with the

words chosen. Grand Central can receive

Grand Central would welcome clarity on

which of the words that Network Rail is in

disagreement with if we are to be able to

respond.

1 Office of Rail Regulation investigation report: Disruption caused by engineering overruns on 27 and 28 December 2014 at King’s Cross and Paddington stations 12 February 2015

17

compensation through Schedule 4 if a

restriction of use is greater than 120 hours

(a type 3 restriction of use). Network Rail

agrees that Grand Central could not receive

compensation under Schedule 4 in relation

to the incident on 27 December 2014 (and

the amended timetable agreed for 28

December 2014) as its duration was less

than 120 hours. Network Rail realises that

Grand Central could have refused to agree

to the emergency timetable though notes

that industry parties are required to adhere

to the Railway Operational Code in Part H

of the Network Code (please see Part H

verbatim in Appendix 13 of this Statement

of Defence).

Grand Central notes that Network Rail

believes that the emergency timetable is a

“Restriction of Use”. However to qualify

for this, the emergency timetable must

have been uploaded into the train service

database by 22:00 on the 26th December

2014.

Network Rail believe that no

compensation is due to Grand Central as

the emergency timetable was a

Restriction Of Use. Grand Central dispute

this view and have asked for evidence

from Network Rail that the timetable was

uploaded into the train service database

by 22:00 the day before to be classed as

a Restriction Of Use. When asked,

Network Rail were unable to evidence that

the revised timetable was uploaded before

22:00 on 26th December and were

therefore unable to confirm that the

revised timetable should be classed as

the Applicable Timetable. Grand Central

argue that not only was there no

discussion about compensation

arrangements, they also dispute Network

Rail’s view as the emergency timetable

being a Restriction of Use. Grand Central

believe the emergency timetable was

uploaded shortly before 22:27 on the 26th

December 2014. As evidence of this we

refer to Appendix 5 attachment 2 of

Network Rail’s Statement of Defence. At

Page 62 at 22:27 on the 26th December it

states “NR have now input amended

18

schedules for our services for tomorrow”.

For Network Rail to rely upon its claim that

it was contractually compliant and that this

was indeed a Restriction Of Use it must

be able to demonstrate that the

emergency timetable was uploaded in

accordance with schedule 4 of the track

access contract. Please can Network Rail

confirm if it has complied in uploading the

emergency timetable?

For clarity we note that no agreement was

made between Network Rail and Grand

Central on compensation arrangements

associated with the introduction of the

emergency timetable. Network Rail

appears to have assumed that the

introduction of the emergency timetable is

compensated under schedule 4. In this

case for Grand Central there would be no

compensation under schedule 4.

Grand Central maintain that there was no

agreement on compensation and that

Network Rail could have compensated

either via Schedule 8 or via clause 8.2 of

the TAC.

5.2 page 12



Network Rail is in disagreement that it has

breached Clause 4.2 “Good faith”. Network

Rail believes that there was no requirement

to agree bespoke compensation

arrangements as compensation

Grand Central argues that by agreeing to

implement the emergency timetable in the

cooperative and timely manner that it did

and the fact that there was a clear

expectation of compensation on Grand

Centrals part that the parties could have

19

arrangements are listed in the contract and

these have been duly followed, i.e. Grand

Central expected to receive Schedule 8

compensation and did receive



run on 27 December 2014. Thus there was

no reliance on Grand Central to have

compensation by the fact that they agreed

to the emergency timetable. Network Rail is

in agreement that emergency conference

calls are not the time nor the place to

discuss compensation.

agreed to compensation.

Network Rail argues that it is unable give

compensation to Grand Central because

it’s not entitled to it. Grand Central

disputes this. Grand Central did not agree

to “P” code services – Network Rail did

this and it is this which has nullified the

possible schedule 8 compensation route.

Grand Central has argued breach of

schedule 5 leading to a claim under

clause 8.2 of the TAC and a breach of

clause 4.2 in relation to “Good Faith”.

Grand Central also believes that the “good

faith” argument has been exacerbated by

Network Rail’s failure to respond to the

two formal letters until a formal complaint

was made.

5.2 page 13



Network Rail agrees that this statement is

factually correct apart from the final line as

Appendix 11 of Grand Central’s Statement

of Claim does not include the full timeline of

events. Network Rail has elaborated on the

missing events from the timeline within

section (a) above under the heading

“Relevant background information not

already provided in Grand Central’s

Statement of Claim”.














5.2 page 13



Network Rail route teams have given the

impression to Grand Central that it was in

20

Network Rail disagrees with Grand Central

that Network Rail was in agreement that

compensation should be paid to Grand


timetable. Network Rail believes that Grand

Central should be compensated in

accordance with the contract and Network

Rail’s LNE & EM route took papers to the

route claims panel and commercial claims

group to explore compensation avenues

under the contract and so within Network

Rail corporate governance. Once

compensation avenues under the contract

had been exhausted, Network Rail explored

the possibility of an extra-contractual

payment in exceptional circumstances and

this possibility was rejected in consideration

of Network Rail’s obligations of fairness in

relation to all industry parties, in particular

the fact that Grand Central do not pay an

Access Charge Supplement (ACS). If

Grand Central did pay an ACS then it would

receive compensation in relation to a type 1

restriction of use and a type 2 restriction of

use which by definition would have meant

compensation for agreeing to the

emergency timetable that ran on 27

December 2014.

agreement that compensation should be

paid. It also gave the impression that had

the new devolution arrangements been in

place it could have settled the claim.

In addition, Grand Central argues that it

too should be compensated in accordance

with the contract. It is Network Rail who

have chosen to “turn off” the schedule 8

compensation that would have been

payable had the emergency timetable

services not been “P” coded by Network

Rail. Grand Central agreed to implement

the emergency timetable and no

agreement was reached on compensation

that resulted in “P” coded services being

excluded from Schedule 8 compensation.

With regard to payment under Schedule 4

following payment of an ACS. It is

disingenuous for Network Rail to suggest

that had we paid the ACS we might have

benefitted from compensation. Grand

Central applied to Network Rail for an

ACS quote three years ago and is still

waiting.

5.2 page 13



Network Rail disagrees with Grand

Central’s statement. The ACS is for

planned possessions where operators are

given restricted access to the network; as

Grand Central note that the calculation of

the ACS does not include emergency

timetables – it covers only possessions

which are planned in relation to normal

engineering works.

Grand Central did agree to the emergency

21

Grand Central agreed to the emergency

timetable this was in effect agreement to

restricted access to the network. The

contract was implemented after the

implementation of the ORR Periodic

Review 2013 (PR13) and so Schedules in

the contract were adjusted to reflect PR13.

On page 747 of the PR13 final

determination it states: Network Rail then quote the ORR PR13 review…..

timetable to assist Network Rail in a very

difficult situation. Had Grand Central

realised that there would be no

compensation it would not have agreed to

the emergency timetable and would have

received compensation under schedule 8.

Grand central maintains that no

agreement was reached relating to

compensation only the implementation of

the emergency timetable.

5.2 page 14



Network Rail does not agree that it did not

respond until a “compolaint” was made.

Network Rail may have not formally

responded to Grand Central until 27

October 2016 but there has been regular

dialogue between the parties to try to

resolve the issue, for example

the meeting between Grand

Central and Network Rail on 6 June

2016 at Northern House whereby

Network Rail stated that they were

requesting archived data for 27

December 2014.

emails on 16 June 2016 between

Grand Central and Network Rail

whereby Network Rail confirmed

that information was received from

archived files so a Schedule 8

investigation could be undertaken.

the Level 1 meeting between

On the 9th May 2016 of Grand Central

sent a Letter Before Claim under the Civil

Procedure Rules (see Appendix 2).

Network Rail did not respond within the

Civil Procedure Rules timescales. In any

event Network Rail only responded to this

when a complaint was made.

The letter before Claim required a formal

response – Network Rail ignored this.

The various meetings that Network Rail

have listed show that Grand Central was

pushing to resolve the matter rather than

Network Rail being proactive in trying to

resolve the issue. There may have been

some limited engagement but this was at

the request of Grand Central not Network

Rail.

22


held on 3 August 2016, including

an email dated 1 August 2016 from

Grand Central that requested the

agenda item “Boxing Day

possession overrun” for the Level 1

meeting agenda held on 3 August

2016 (see Appendix 4 for a copy of

the email).

an email of 5 August 2016 following

the Level 1 meeting on 3 August

2016 from Grand Central to

Network Rail whereby Grand

Central demonstrated the services

they wished to run on 27 December

2014, as well as their own

investigation into what occurred on

27 December 2014.

an email of 6 October 2016 from

Grand Central to Network Rail

whereby Grand Central

demonstrated the emergency

timetable that agreed to on 27

December 2014 (see Appendix 6

for a copy of the email).

a meeting on 7 October 2016

between Grand Central and

Network Rail whereby both parties

undertook a detailed check for any

discrepancies between the agreed

emergency timetable and what

actually ran on 27 December 2014

(see Appendix 7 for a copy of the

23

work undertaken).

5.2 page 15



Network Rail did respond formally on 27

October 2016 and this was following regular

dialogue between the parties to resolve the

situation:
















work undertaken).

Grand Central sent a letter to Network

Rail on the 12th September which was a

follow up to the Letter before Claim issued

on the 9th May 2016.

The meetings listed as suggesting regular

dialogue were all instigated by Grand

Central. In any event these meetings did

not address the concerns raised in the

letter.

5.2 page 15



Network Rail did respond formally to Grand

Central’s letters on 27 October 2016 though

Grand Central do not mention the dialogue

that was taking place to try to resolve the

issue:

the meeting between Grand

Central and Network Rail on 6 June

2016 at Northern House whereby

Grand Central was the instigator of the

meetings and in any event Network Rail

had two formal letters to answer one

within the CPR timescales. Grand Central

was infuriated by the fact that Network

Rail had not responded. Grand Central

does not accept that the meetings were

an adequate response to two formal

letters.

24

Network Rail stated that they were

requesting archived data for 27

December 2014.

emails on 16 June 2016 between


whereby Network Rail confirmed

that information was received from

archived files so a Schedule 8

investigation could be undertaken

the Level 1 meeting between


held on 3 August 2016, including

an email dated 1 August 2016 from

Grand Central that requested the

agenda item “Boxing Day

possession overrun” for the Level 1

meeting agenda held on 3 August

2016 (see Appendix 4 for a copy of

the email).

an email of 5 August 2016 following

the Level 1 meeting on 3 August

2016 from Grand Central to

Network Rail whereby Grand

Central demonstrated the services

they wished to run on 27 December

2014, as well as their own

investigation into what occurred on

27 December 2014.






25











work undertaken).

5.2 page 16



Network Rail disagrees with this statement

that Network Rail has breached Clause 4.2

of the contract (Good faith). Good faith

means "adhere to the spirit of the contract,

to observe reasonable commercial

standards of fair dealing, to be faithful to the

agreed common purpose, and to act

consistently with the justified expectations

of [the other party]" [CPC Group Ltd v

Qatari Diar Real Estate Investment

Company [2010] EWHC 1535 (Ch)].

Network Rail has observed reasonable

commercial standards of fair dealing so that

the contract is adhered to as it is legally

binding. Network Rail has compensated

Grand Central as it was obliged to under

the provisions of Schedule 8 for the

timetable agreed for 27 December 2014.

Network Rail has been very open with

Grand Central, sharing status of internal

panel papers (CCG and Route Claims

Grand Central stands by its statement in

Para 4.18. and entirely agrees with the

definition of Good faith highlighted by

Network Rail – it is exactly against these

behavioural standards that Grand Central

believes that Network Rail have fallen

short of by its unilateral use, without

Grand Central’s knowledge, of its own

processes to “switch off” the TAC

mechanisms by which Grand Central

would have received compensation for

implementation of the Emergency

Timetable

Grand Central do not believe that has

acted in good faith particularly in relation

to observing reasonable commercial

standards of fair dealing. We draw your

attention to the two letters from Grand

Central that we argue were ignored until a

complaint was raised (Grand Central’s

Statement of Claim Appendix 2 and 3).

26

Panel) and Network Rail has investigated

any obligation to make a further payment

within Network Rail’s governance as well as

confirmed that the correct amount was paid

under Schedule 8 in relation to 27

December 2014. Network Rail suggested

an independent mediation and Grand

Central did not agree; Grand Central

suggested ADA was the industry way that

was quickest and easiest. As a

consequence the parties agreed that ADA

was the appropriate forum instead of

mediation. Network Rail disagrees with the

reference made to how the ADA process

was agreed stated in the row dated “31st

Oct 2016” of Appendix 11 of Grand

Central’s Statement of Claim.

With regard to the statement that Network

Rail has made here that:

“Network Rail suggested an independent mediation and Grand Central did not agree; Grand Central suggested ADA was the industry way that was quickest and easiest. As a consequence the parties

agreed that ADA was the appropriate

forum instead of mediation. Network Rail

disagrees with the reference made to how

the ADA process was agreed stated in the

row dated “31st Oct 2016” of Appendix 11

of Grand Central’s Statement of Claim.”.”

This statement is misleading and factually

incorrect.

In the letter dated the 12th of September

2016 (see Appendix 3 of Grand Central’s

Statement of Claim) it was Grand Central

who suggested the use of mediation and it

was Network Rail that rejected this.

Grand Central was very willing to try

mediation and it was Network Rail that

was unwilling to accept independent

mediation.

In Network Rail’s letter of 27th October

(see Appendix 5 of Grand Central’s

Statement of Claim) there was no mention

of mediation despite the offer being in the

letter from Grand Central dated the 12th

September(see Appendix 3 of Grand

27

Central’s Statement of Claim)·

At the level 1 meeting on 31st October

Grand Central raised it again in the

context of their refusal to respond to the

offer in the letter from Grand Central. It

was only at this point that Network Rail did

then acknowledge this may be a way

forward. However by this stage Grand

Central had begun the process via the

Access Dispute Committee. Network Rail

agreed that the most appropriate course

at that stage was to continue with the ADA

process.

5.2 page 17



Network Rail disagrees with this statement.

Clause 8.2 of the contract states: (Network Rail the quotes Clause 8.2)

Clause 8.2 is not relevant as it requires

there to have been a breach of contract and

there has not been a breach of contract.

Grand Central was compensated in

accordance with Schedule 8 for the

timetable that was agreed to be run on 27

December 2014

Grand Central argue that a failure to

provide access to the network in

accordance with the track access contract

without any compensation amounts to a

breach of contract.

Grand Central disagree that there has not

been a breach of contract and although

Grand Central agreed to the emergency

timetable in reality there was no

alternative solution.

5.2 page 17


by Grand Central in its Statement of Claim:

Part a) refers to an email from Grand

Central to Network Rail dated 5 January

2015 and Network Rail believes that the

statement Grand Central “receiving nothing

Grand Central argues that at the time of

the statement this was the case. Grand

Central had not received any

compensation. The Schedule 8

Statements supplied by Network Rail in

their Appendix 2 to the Network Rail

28

from you to reflect the massive impact

inflicted on our operation…” is incorrect.

Grand Central were compensated in

accordance with Schedule 8 for unplanned

disruption on 27 December 2014 as the day

42 statement demonstrates a total minutes

delay set to Railtrack (Network Rail) of

55.50 minutes for service group EC01 and

200 minutes for service group EC02 (see

Appendix 2 within this Statement of

Defence for a copy of the signed day 42

statement relevant to 27 December 2014.

Statement of Defence were not created

until the 27th February 2015 whereas the

email from Grand Central which states

“receiving nothing from you to reflect the

massive impact inflicted on our

operation…” was sent of the 5th January

2015. This statement was correct.

The Schedule 8 compensation in the

statements was for trains not running to

plan against the emergency timetable on

the 27th December 2014. Grand Central is

not questioning this compensation. It is

claiming compensation due to the

implementation of the emergency

timetable.

5.2 page 17

Part (c) fails to point out that Network Rail


following the 9 May 2016 letter:

Part (d) fails to point out that Network Rail


following formal letters of Grand Central.

Grand Central has simply listed the

documents that it has provided. The

response from Network Rail has been

listed in 4.20 e). Grand Central is not

suggesting that Network Rail did not

provide a response – the descriptions in

4.20 c) and d) are simply descriptions of

the letters contained in the Statement of

Claim.

With regard to Network Rail’s response of

the 27th October 2016:







29



formally responded.

In any event the Letter Before Claim was

made under the Civil Procedure Rules

and Network Rail was made clear of this

fact. It chose simply to ignore the CPR

timescales and the letter until the

complaint by Grand Central.

5.2 page 18

Appendix 5 mentioned in part (e) fails to

include the Appendix contained within

Network Rail’s letter which is relevant as it

demonstrates a timeline of events.

Grand Central agree – this was an error in

preparing the Grand Central Statement of

Claim. We note that Network Rail has

supplied this in its Appendix 8 to its

Statement of Defence. Grand Central are

content with its inclusion.

5.2 page 18

Appendix 6 mentioned in part (f) fails to list

the entire clause 5 of the contract

(PERMISSION TO USE), i.e. clauses 5.3 to

5.8 are missing. Network Rail provides the

full version of clause 5 of the contract in

Appendix 10 of this Statement of Defence

as clauses 5.3 to 5.5. are relevant to this

subject.

Grand Central has provided extracts of



case we have not suppled clauses 5.3 to






“Copies of the following documents … shall be annexed and cross referenced to the statement:

the relevant extracts of contractual Documents containing the provision(s) under which the referral to the ADA arises and/or provision(s) associated with the substance of the dispute;”

5.2 page Appendix 7 mentioned in part (g) is not the Grand Central has provided a

30

18 relevant copy of Schedule 5 that was in

place on 27 December 2014. The Schedule

5 listed in the Statement of Claim includes

the third supplemental agreement that was

ORR approved on 7 August 2015. The










December 2014 in Appendix 11.








its claim.



















5.2 page 18

In relation to the Appendix 9 listed in part

(i), Network Rail notes that clause 8.1 is

incorrectly listed

Agreed.

In relation to Appendix 10 referred to in part

(j), Network Rail disagrees with the claim

made following a meeting with Grand




31

Central on 7 October 2016 which confirmed

that the emergency timetable agreed ran as

planned. Network Rail notes that the

Performance Points listed are incorrect as

the correct copy of the contract that was

live on 27 December 2014 included the first







applicable Appendix 1 to Schedule 8 in







its claim.



















5.2 page 19

Network Rail disagrees with the statement

made in 5.6 of Grand Central’s Statement.

Network Rail does not believe it has

breached clause 4.2 (Good faith). Good

faith means "adhere to the spirit of the

contract, to observe reasonable commercial

standards of fair dealing, to be faithful to the

agreed common purpose, and to act

Grand Central stands by its statement in

Para 4.18. and entirely agrees with the

definition of Good faith highlighted by

Network Rail – it is exactly against these

behavioural standards that Grand Central

believes that Network Rail have fallen

short of by its unilateral use, without

Grand Central’s knowledge, of its own

32

consistently with the justified expectations

of [the other party]" [CPC Group Ltd v

Qatari Diar Real Estate Investment

Company [2010] EWHC 1535 (Ch)].

Network Rail has observed reasonable

commercial standards of fair dealing so that

the contract is adhered to as it is legally

binding. Network Rail has compensated

Grand Central as it was obliged to under

the provisions of Schedule 8 for the

timetable agreed for 27 December 2014.

Network Rail believes that there was no

requirement to agree bespoke

compensation arrangements as

compensation arrangements are listed in

the contract and these have been duly

followed, i.e. Grand Central did receive



run on 27 December 2014. Network Rail is

in agreement that emergency conference

calls are not the time nor the place to

discuss compensation.

processes to “switch off” the TAC

mechanisms by which Grand Central

would have received compensation for

implementation of the Emergency

Timetable

Grand Central do not believe that has

acted in good faith particularly in relation

to observing reasonable commercial

standards of fair dealing. We draw your

attention to the two letters from Grand

Central that we argue were ignored until a

complaint was raised (Grand Central’s

Statement of Claim Appendix 2 and 3).

Grand Central has in effect agreed to

implement an emergency timetable at

very short notice over the Christmas

period in order to assist Network Rail.

Grand Central held an expectation that

compensation would be paid via Schedule

8 of the contract. (See Appendix 1 of the

Grand Central Statement of Claim).

Network Rail has “P” coded the amended

schedules without the agreement of

Grand Central. There has been no

discussion on compensation prior to

Network Rail deciding to “P” code the

affected services.

Despite Grand Central playing its part in

helping Network Rail out it and acting in

good faith, Network Rail has not done so.

This agreement by Grand Central has

cost it in the region of £50K. For a small

33

Network Rail suggested an independent

mediation and Grand Central did not agree;

Grand Central suggested ADA was the

industry way that was quickest and easiest.

As a consequence the parties agreed that

ADA was the appropriate forum instead of






regional company this is a significant

financial loss. It is perverse that Grand

Central has assisted Network Rail in this

manner only to find that it has been

financially penalised because of Network

Rails possession overrun at Finsbury

park.

Where Network Rail’s Statement of

Defence has indicated that “Network Rail

suggested an independent mediation and

Grand Central did not agree; Grand

Central suggested ADA was the industry

way that was quickest and easiest.” This

statement is misleading and factually

incorrect.




who suggested the offer of mediation and

it was Network Rail that rejected this.




mediation.






September (see Appendix 3 of Grand


At the level 1 meeting on 31st October Grand

Central raised it again in the context of their

34

refusal to respond to the offer in the letter

from Grand Central. It was only at this point

that Network Rail did then acknowledge this

may be a way forward. Shortly after this

meeting Grand Central proposed the

industry form of mediation using

ADRC and in consultation with Network

Rail.

5.2 page 19

By Grand Central agreeing to the

emergency timetable, Grand Central in

effect agreed to Network Rail P-coding

services so that the real time industry train

running system TRUST could be updated to

reflect the timetable agreed. Network Rail’s

control centre staff undertook this in line

with the Network Rail standard “National

Control Instructions” (NCI). The NCI

instructions apply at all Network Rail

Controls [ICCS] and the National

Operations Centre and in addition they are

available to Train Operators. The Network

Rail Route Control Manager has confirmed

that compensation arrangements are never

discussed as there is no requirement to do

so. Route Control managers are

responsible for making sure the railway can

operate as effectively as possible on any

given day and so operators are contacted

to make any arrangements accordingly.



to an emergency timetable that this also

constituted an agreement for “P coding”



Under the Track Access Contract and the

Network Code there is no obligation or

requirement for Network Rail to “P” code

services. Nor is there any obligation

placed on a Train Operator to agree to “P”

Code. Grand Central has provided by

way of additional information the

Emergency timetabling flowchart from

Part H of the Network Code. This is in

Appendix 1.

Grand Central asks Network Rail to

provide the evidence to suggest that by

“agreeing to the emergency timetable,

Grand Central in effect agreed to Network

Rail P-coding services so that the real

time industry train running system TRUST

could be updated to reflect the timetable

agreed.”

Grand Central maintains and Network Rail

35

agree that no discussion took place about

compensation arrangements nor was this

the right place or time to discuss this.


Network Rail has stated “By Grand Central agreeing to the emergency timetable, Grand Central in effect agreed to Network Rail P-coding services so that the real time industry train running system TRUST could be updated to reflect the timetable agreed.”





agreed.


“P” coding the trains this was Network Rail

that acted on its own initiative.

5.2 page 20



By Grand Central agreeing to the

emergency timetable, Grand Central in

effect agreed to Network Rail P-coding

services so that the real time industry train

running system TRUST could be updated to

reflect the timetable agreed. At no stage did

Network Rail and Grand Central agree that

compensation would be paid. Network

Rail’s control centre staff undertook the P-

coding in line with the Network Rail

standard “National Control Instructions”

(NCI). The NCI instructions apply at all



to an emergency timetable that this also

constituted an agreement for “P coding”



Under the Track Access Contract and the

Network Code there is no obligation or

requirement for Network Rail to “P” code

services. Nor is there any obligation

placed on a Train Operator to agree to “P”

Code. Grand Central has provided by

way of additional information the

Emergency timetabling flowchart from

36

Network Rail Controls [ICCS] and the

National Operations Centre and in addition

they are available to Train Operators. The

Network Rail Route Control Manager has

confirmed that compensation arrangements

are never discussed as there is no

requirement to do so. Route Control

managers are responsible for making sure

the railway can operate as effectively as

possible on any given day and so operators

are contacted to make any arrangements

accordingly

Part H of the Network Code. This is in

Appendix 1.

Grand Central asks Network Rail to

provide the evidence to suggest that by

“agreeing to the emergency timetable,

Grand Central in effect agreed to Network

Rail P-coding services so that the real

time industry train running system TRUST

could be updated to reflect the timetable

agreed.”

Grand Central maintains and Network Rail

agree that no discussion took place about

compensation arrangements nor was this

the right place or time to discuss this.


Network Rail has stated “By Grand

Central agreeing to the emergency

timetable, Grand Central in effect agreed

to Network Rail P-coding services so that

the real time industry train running system

TRUST could be updated to reflect the

timetable agreed.”





agreed.


“P” coding the trains this was Network Rail

that acted on its own initiative.

5.2 page 20





37

Network Rail agreed to explore all possible

ways to compensate that were within the

scope of the contract and within

governance








to compensate.





contractual payment to Grand Central”.

5.2 page 20



The Schedule 8 regime of the contract was

in place on 27 December 2014, following

agreement to the emergency timetable for

27 December 2014, and Grand Central

were compensated in accordance with

Schedule 8. The emergency timetable was

not imposed on Grand Central; the

emergency timetable was agreed and

Grand Central attended the conference

calls proposing their amended train plan

(see Appendix 5 of this Statement of

Defence for a copy of the email that

included a Review of Service Disruption by

Grand Central).

Grand Central maintain that the facts of

the case are that there was no agreement

on compensation arrangements and this

is supported by Network Rail when it

states in paragraph 1 of page 12 of its

Statement of Defence “The Network Rail Route Control Manager has confirmed that compensation arrangements are never discussed as there is no requirement to do so”. It is clear from this

statement that neither party has agreed

what compensation arrangements would

be in place.

Grand Central agreed to an emergency

timetable not to an agreement to waive its

right to compensation.

Grand Central did not agree to “P” coding

as suggested by Network Rail.

5.2 page 21



Grand Central has asked Network Rail for

an ACS quotation on many occasions and

38

Calculating an ACS is a substantial piece of

work and is normally undertaken as part of

the periodic review process for the following

Control Period. Grand Central has asked

for an ACS quotation from Network Rail and

then told Network Rail it was no longer

interested in an ACS quotation at a meeting

on 17 October 2014 held at Grand Central’s

office where the parties discussed a

bespoke Schedule 4 and Schedule 8

regime model with Network Rail’s Senior

Regulatory Economist in attendance. Since

then Grand Central has asked Network Rail

for an ACS quotation via email on 20 April

2016 (see Appendix 18 of this Statement of

Defence for a copy of the email trail).

Network Rail will be calculating an ACS for

Grand Central as part of the Periodic

Review 2018 process so there is the option

for Grand Central to pay into an ACS from

the start of Control Period 6. If Grand

Central would have been genuinely

interested in having an ACS then it would

have been included in its current contract

that went live from 1 August 2014.

Network Rail has been unable to supply a

quotation. This appears to be through a

lack of knowledge when individuals have

left Network Rail.

With regard to the email request for an

ACS quotation this predates the date that

you have suggested. This request was

put as part of a request for our sister

company GNWR. This request originally

dates back to 2013.

With regard to the statement that

“Calculating an ACS is a substantial piece

of work and is normally undertaken as

part of the periodic review process for the

following Control Period”.

Network Rail has been able to calculate

an ACS charge for GNWR during a

control period. It has taken time not

necessarily because it is complex – it has

been slow because of a lack of knowledge

in Network Rail on the calculation of an

ACS.

5.2 page 21



Network Rail does not believe it has

breached clause 4.2 (Good faith). Network

Rail believes that there was no requirement

to agree bespoke compensation

arrangements as compensation

arrangements are listed in the contract and

these have been duly followed, i.e. Grand

Grand Central do not believe that bespoke

compensation was necessary. Had

Network Rail not “P” coded Grand

Central’s services it would have received

compensation payment for the emergency

timetable through Schedule 8.

We believe that Network Rails poor and

39

Central did receive compensation via

Schedule 8 for the emergency timetable

that was agreed to run on 27 December

2014.

slow response to two formal letters both of

which offered alternatives to raising a

formal dispute is an indicator of a lack of

good faith in dealing with this dispute.

Network Rail has only responded to these

letters following a formal complaint (See


of Claim).

Network Rail did not respond to Grand

Centrals Letter Before Claim of the 9th

May 2016 within the required timescales

under the Civil Procedure Rules. Had

Grand Central taken this matter to court

the court could have imposed sanctions

for non-compliance. We believe that this

action in itself shows a lack of good faith

on Network Rail’s part.

5.2 page 21



Network Rail was in regular dialogue with

Grand Central on this subject. Network Rail


following the 9 May 2016 letter:

Grand Central would like to understand

from Network Rail which part of Grand

Central’s statement it does not agree with.

For clarity Paragraph 5.16 states:

Furthermore Grand Central has also

sought to resolve the dispute

amicably and without the need to

revert to a formal dispute.

Grand Central issued A Letter Before

Claim on the 9th May 2016 under the

Civil Procedure Rules and also sought

agreement from Network Rail for

mediation (see Appendices 2 and 3).

With regard to the Letter before Claim

Network Rail did not respond within

40

the CPR timescales and only

responded after a formal complaint

was made.








Rail.

5.2 page 22



Network Rail suggested an independent

mediation and Grand Central did not agree;

Grand Central suggested ADA was the

industry way that was quickest and easiest.

As a consequence the parties agreed that

ADA was the appropriate forum instead of






Where Network Rail’s Statement of

Defence has indicated that “Network Rail

suggested an independent mediation and

Grand Central did not agree; Grand

Central suggested ADA was the industry

way that was quickest and easiest.” This

statement is misleading and factually

incorrect.




who suggested the offer of mediation and

it was Network Rail that rejected this.




mediation.




41



September (see Appendix 3 of Grand


At the level 1 meeting on 31st October

Grand Central raised it again in the

context of their refusal to respond to the

offer in the letter from Grand Central. It

was only at this point that Network Rail did

then acknowledge this may be a way

forward. Shortly after this meeting Grand

Central proposed the industry form of

mediation using ADRC and in consultation

with Network Rail.

5.2 page 22



The Network Rail response dated 27

October 2016 took numerous days of

analysis and preparation and it is by

coincidence that Grand Central sent a

chasing email to Network Rail’s Route

Managing Director the day before the

Network Rail letter was submitted to Grand

Central.

Grand Central notes this explanation.

However Network Rail’s still missed the

deadline under the Civil Procedure Rules

by a wide margin.

5.2 page 23



Network Rail has never refused to pay

compensation. Grand Central was

compensated on 27 December 2014 in

accordance with the provisions of the

contract.

It is clear that Network Rail has not yet

understood the basis for Grand Central’s

claim. This is of concern as it is nearly

three years old. The compensation that

Grand Central is seeking relates to the

introduction of the emergency timetable

and the cancelations and delays

associated with this when compared to

the planned engineering timetable agreed

42

in September 2014.

5.2 page 23



Network Rail has been in regular

engagement with Grand Central on this

subject as evidenced in this section above.

Grand Central do not agree that there has

been engagement on this matter.

However, the responses from Network

Rail have been slow and are not

acceptable particularly with regards to

how it has responded to formal letters.

Grand Central has tried to engage with

Network Rail by raising the dispute at

meetings but this has not moved the

dispute forward – if anything raising this

dispute over a two year plus period has

delayed its resolution.

Grand Central does not accept that

evidence of meetings shows active

discussion and a willingness to resolve

the issue. In Grand Central’s case our

experience has been quite the opposite.

Grand Central has tried to elicit a

response from Network Rail by issuing

two formal letters. This has not worked

despite the offer of mediation and the

issue of a Letter before Claim. Grand

Central has reluctantly has had no option

but to progress this matter via a formal

dispute.

5.2 page Network Rail disagrees with the statement Grand Central has provided extracts of

43

23 made in 5.22 of Grand Central’s Statement.

Clause 5.1 of the contract listed in

Appendix 6 of Grand Central’s Statement of

Claim fails to list the entire clause 5 of the

contract (PERMISSION TO USE), i.e.

clauses 5.3 to 5.8 are missing. Network Rail

provides the full version of clause 5 of the

contract in Appendix 10 of this Statement of

Defence as clauses 5.3 to 5.5. are relevant

to this subject.

Permission to Use is subject to the terms in

the contract which includes the Network

Code and Grand Central agreed to an

emergency timetable for 27 December

2014. Further Grand Central agreed to the

amended timetable well in advance of the

Christmas 2014 possession blockade, a

reduced Grand Central service compared to

Grand Central’s standard timetable, for the

days 27 December 2014 and 28 December

2014 (see Appendix 14 of this Statement of

Defence. Permission to use does not mean

a 24 hour / 7 days a week right to the

network and agreeing emergency

timetables is included as part of the

process. Network Rail does not agree that

Grand Central is able to recover all

“Relevant Losses” as Network Rail is not in



case we have not suppled clauses 5.3 to






“Copies of the following documents … shall be annexed and cross referenced to the statement:

the relevant extracts of contractual Documents containing the provision(s) under which the referral to the ADA arises and/or provision(s) associated with the substance of the dispute;”

Grand Central agrees that Permission to

use is subject to the terms in the contract

which includes the Network Code and Grand

Central agreed to an emergency timetable for

27 December 2014.

Grand Central agrees that “Further Grand

Central agreed to the amended timetable well

in advance of the Christmas 2014 possession

blockade, a reduced Grand Central service

compared to Grand Central’s standard

timetable, for the days 27 December 2014

and 28 December 2014 (see Appendix 14 of

this Statement of Defence.

Grand central agrees with “Permission to use

does not mean a 24 hour / 7 days a week

right to the network and agreeing emergency

timetables is included as part of the process.”

Grand Central disagrees with “Network

Rail does not agree that Grand Central is

44

breach of contract. Furthermore, the

schedule 5 provided by Grand Central in

Appendix 7 of its Statement of Claim is not

the Schedule 5 of the contract applicable on

27 December 2014. The schedule 5 listed

in the Statement of Claim of Grand Central

includes the third supplemental agreement

that was ORR approved on 7 August 2015.

The correct copy of the contract that was

live on 27 December 2014 included the first








December 2014 in Appendix 11 of this


able to recover all “Relevant Losses” as

Network Rail is not in breach of contract.”

Grand central believe that a failure to

provide access without compensation is a

breach of contract.









its claim.


















45


5.2 page 24



Grand Central were not “perversely

penalised” for agreeing to the emergency

timetable. Network Rail acted reasonably in

accordance with the contract to facilitate an

emergency timetable. Network Rail does

not agree that there is a “perverse”

incentive to agree to future emergency

timetables as the parties are obligated to do

so under Part H of the Network Code

(Railway Operational Code) (see Appendix

13 of this Statement of Defence for Part H

verbatim).

This is a matter fact for Grand Central.

Grand Central has a significant loss of

around £50K, due to the agreement of the

emergency timetable. This agreement

was to assist Network Rail during a

difficult incident.

Grand Central also note that Part H does

not deal with compensation arrangements

here and this is the matter in dispute.

Under Part H there is no obligation to

agree to the timetable as Network Rail

seems to suggest.

Grand Central also argues that under

Para 5.2.2 of Part H (see Appendix 13 of

Network Rail’s Statement of Defence at

page 176 that Network Rail is under an

obligation to consider the impact of the

emergency timetable on Train Operators.

Para 5.22 states Network Rail must have

“regard to the feasibility of implementation

insofar as it impacts on Affected Train

Operators). The impact to Grand Central

was significant in terms of impact on our

passengers and the financial impact.

5.2 page 24


made in 5.28 of Grand Central’s Statement

of Claim as explained in Network Rail’s

view on 5.22 of Grand Central’s Statement

of Claim listed above. Network Rail does

not understand the following statement

made in half brackets by Grand Central in

5.28: “(Appendix is a breach of contract and








46

whether Clause 8.2 allows Grand Central to

recover compensation for the disruption to

its services.”

access.













With regard to the error relating to the

“(Appendix is a breach of contract and

whether Clause 8.2 allows Grand Central

to recover compensation for the disruption

to its services.” This should read

“(Appendix 7) is a breach of contract and

whether Clause 8.2 allows Grand Central

to recover compensation for the disruption

to its services.” Apologies for the error.

5.2 page 24


made in 5.29 of Grand Central’s Statement

of Claim. Network Rail agreed an

emergency timetable with Grand Central for

27 December 2014 in accordance with the

contract and the Network Code and Grand

Central were allowed access to run those

services on 27 December 2014.

Grand Central maintain that agreement by

Grand Central in the circumstances of the

incident was the only option available and

that if Grand Central had not agreed then

this could have resulted in a much worse

situation for Network Rail. Grand central

agreed to an emergency timetable,

however there was no agreement on

compensation.


47







access.

5.2 page 24

In Appendix 11 of Grand Central’s

Statement of Claim, a timeline of events is

listed which does not include all of the

events that have occurred. In Appendix 5 of

its Statement of Claim, Grand Central

chose to include Network Rail’s letter dated

27 October 2016 without including

Appendix 1 that was attached to Network

Rail’s letter and this Appendix 1 listed a

timeline of events yet Grand Central has

not included all of these events in Appendix

11 of the Statement of Claim. The full

version of Network Rail’s 27 October 2016

letter, including its Appendix 1, is included

in Appendix 8 of this Statement of Defence.














5.3 Issues not addressed by the Claimant that the Defendant considers should be taken into account as material to the determination, and the reasons supporting these contentions.

5.3 Page 24

If Grand Central paid into the ACS regime,

parts 2.5 and 2.6 of the ORR model clause

contract would replace the 2.5 and 2.6 in

the contract and compensation would have

been received by Grand Central under

Schedule 4 for 27 December 2014 for a

Type 1 Restriction of Use.

The ADA is asked to note the difficulty in

obtaining an ACS quotation from Network

Rail. The ACS is based solely on planned

possessions known well in advance it is

not based on emergency possessions of

the type that had occurred here. In any

event Grand Central does not agree with

Network Rail that schedule 4 is the only

48

route to compensation. Grand Central

has identified clause 8.2.

Grand Central also reiterates that

although they agreed to the emergency

timetable there was no agreement on

compensation. Grand Central expected to

be compensated under schedule 8 for the

introduction of the emergency timetable.

It was only after the event that it became

clear that Network Rails decision to “P”

cod services would leave Grand Central

with a significant financial loss.

5.3 Page 25

Grand Central should have included all

events included in Appendix 1 of Network

Rail’s letter dated 27 October 2016. In

Appendix 5 of its Statement of Claim,

Grand Central chose to include Network

Rail’s letter dated 27 October 2016 without

including Appendix 1 that was attached to

Network Rail’s letter. The full version of

Network Rail’s 27 October 2016 letter,

including its Appendix 1, is included in


Agreed – this was an error in the

translation process from a Pdf to a word

document.

5.4 Why the arguments raised in 5.1 to 5.3 [sections (b) and (c) above] taken together favour the position of the Defendant.

In relation to “not acting in good faith”:

5.4 Page 26

Network Rail has compensated Grand

Central as it was obliged to under the

provisions of Schedule 8 for the timetable

agreed for 27 December 2014.

Grand Central dispute this as

compensation for the introduction of the

emergency timetable was not discussed.

It was Network Rail who decided to

remove Grand Central services from the

schedule 8 compensation regime.

49

Grand Central has at no stage has

agreed to waive its contractual right to

compensation. Indeed the issue of

compensation was raised at the earliest

opportunity on the 5th January 2015

(Appendix 1) and discussions have been

ongoing ever since at regular meetings


managers.

5.4 Page 26

Thus there was no reliance on Grand

Central to have compensation by the fact

that they agreed to the emergency

timetable. Network Rail is in agreement that

emergency conference calls are not the

time nor the place to discuss compensation.

Grand Central dispute this as

compensation for the introduction of the

emergency timetable was not discussed.

It was Network Rail who decided to

remove Grand Central services from the

schedule 8 compensation regime.

Grand Central has at no stage has

agreed to waive its contractual right to

compensation. Indeed the issue of

compensation was raised at the earliest

opportunity on the 5th January 2015

(Appendix 1) and discussions have been

ongoing ever since at regular meetings


managers.

5.4 Page 26

The statements made in 5.2 and 5.5 of

Grand Central’s Statement of Claim

demonstrate Network Rail working in good

faith to facilitate the emergency timetable

Grand Central argue that the breach of

good faith has occurred after the

agreement of the emergency timetable.






50




of Claim).

Network Rail did not respond to Grand

Centrals Letter Before Claim of the 9th

May 2016 within the required timescales

under the Civil Procedure Rules. Had

Grand Central taken this matter to court

the court could have imposed sanctions

for non-compliance. We believe that this

action in itself shows a lack of good faith


5.4 Page 26

Network Rail realises that Grand Central

could have refused to agree to the

emergency timetable though notes that

industry parties are required to adhere to

the Railway Operational Code in Part H of

the Network Code. Network Rail believes

that the parties are here to serve the needs

of the passenger in times of disruption

Grand Central agrees that it would not

have been appropriate to refuse to alter

services based on compensation

discussions.

In this case Grand Central has agreed to

the emergency timetable in order to assist

Network Rail and to serve the needs of

the passenger in times of disruption.

Compensation was not discussed until

after the event and by this stage Network

Rail had already decided to “P” code

Grand Central’s services that resulted in

no schedule 8 compensation for an

unplanned incident which was solely

Network Rail’s responsibility.

Network Rail should not have “P” coded

these services without agreement.

5.4 Page 27

The full timeline of events, the Appendix 11

in Grand Central’s Statement of Claim plus

the additional events mentioned by Network

On the 9th May 2016 of Grand Central

sent a Letter Before Claim under the Civil

Procedure Rules (see Appendix 2).

51

Rail in this Statement of Defence,

demonstrate the regular dialogue between

the parties on this subject and Network Rail

believes this is within the spirit of good faith.

Network Rail did not respond within the

Civil Procedure Rules timescales. In any

event Network Rail only responded to this

when a complaint was made.

The letter before Claim required a formal

response – Network Rail ignored this.

Had Grand Central taken this matter to

court the court could have imposed

sanctions for non-compliance. We

believe that this action in itself shows a

significant and worrying lack of good faith









Rail.









of Claim).

Had Grand Central taken this matter to

court the court could have imposed

sanctions for non-compliance. We believe

that this action in itself shows a lack of

52

good faith on Network Rail’s part.

In relation to making “a failure to pay compensation”:

5.4 Page 27

As stated in 20.33 of PR13 conclusions, the

ACS is about “planned possessions”, where

“planned” simply means agreed before the

day on which it occurred and “this is

principally as a result of Network Rail

undertaking engineering work”,

Paragraph 20.33 states:

“The Schedule 4 possessions regime is designed to compensate train operators for the financial impact of planned possessions where operators are given restricted access to the network, principally as a result of Network Rail undertaking engineering work.”

The definition of “planned” does not form

part of 20.33. Indeed what went on in

relation to the incident at Finsbury Park

can in no way be classed as “planned

possession”

5.4 Page 26

Network Rail can only compensate Grand

Central further, via clause 8.2 of the

contract, if there has been a breach of

contract and this is not the case. Network

Rail and Grand Central agreed to an

emergency timetable in advance of 27

December 2014.








access.








53






5.4 Page 26

Network Rail disagrees with Grand Central

that Network Rail was in agreement that

compensation should be paid to Grand


timetable as set out in 4.13 of Grand

Central’s Statement of Claim










to compensate.





contractual payment to Grand central”.

54

5 SIGNATURE

For and on behalf of the Grand Central Railway Company Ltd

Signed

------------------Jonathan Cooper-----------------

Print Name

___________________________________

Position

Head of Contracts

___________________________________

55

Annex 1 Emergency Timetable Flow Chart Extract from part H of the network Code

56

57