Select Committee on the Crossrail Bill Minutes of Evidence

Examination of Witnesses (Questions 10000 - 10019)

  10000. Now, tell me, so far as proving loss is concerned, will it still remain for you to prove, and it may be difficult, that you have actually incurred costs, direct losses and expenses as a result of the construction?
  (Mr Oatway) Absolutely. It takes nothing away from the burden of proof that is on the person suffering the loss that they need to provide suitable back-up evidence that those losses have been suffered.

  10001. You simply seek a bespoke regime which caters for this category of loss which, otherwise, you will not qualify for because of that definition of network change?
  (Mr Oatway) Yes, I am seeking something similar to what is up on the screen.

  10002. Now, it may be said that, if that is the standard railway industry practice in that document we looked at, defining network change, why not simply rest with the ordinary practice? Why is it that you are requiring a bespoke provision here in the case of Crossrail?
  (Mr Oatway) Because I believe that an inevitable consequence of using the standard industry processes will be that there will be gaps in those regimes which will mean that the operator will not be compensated on a no net gain, no net loss basis, as the Promoter intends in its paper H2.

  10003. Could we then put up please EWS32.[18] You have there shown the sorts of losses which might be included in heads of claim for disruption which would, otherwise, be non-compensatable. Can you just take us through that.

  (Mr Oatway) Yes, I have merely listed a few of the heads of claim which commonly arise in these sorts of circumstances. As you can see, the first one there is loss of revenue from our trains that cannot even run at all or they have to be restricted in some way, for example, for weight or length so that we cannot carry the amount of goods that we normally carry and, therefore, we do not get as much revenue as we would do otherwise. Other forms are diversions where we might have to go over a longer route which means that we have to pay out more fuel costs, and they are rising all the time, train crew costs so that drivers have to be paid more for working longer and, if the other route is not electrified, we may have to provide alternative locomotives to enable the train to operate over those routes.

  10004. These are all types of loss which will be recoverable from Crossrail if they are as a result of network change, but simply will not be recoverable in the case of those temporary speed restrictions and so forth if they last for less than six months?
  (Mr Oatway) That is correct, assuming that we do not use G9, yes.

  10005. LORD JAMES OF BLACKHEATH: Is there a problem in this insofar as you could find yourself with, say, a train which is inadequately loaded, but you have not been able to meet the target capacity loading for that particular freight operation and that, in those circumstances, you have the opportunity to gain an unfair advantage by claiming compensation for what is actually a problem of your marketplace at that time rather than something which has been imposed upon you and there is an opportunity to catch up with what you would have otherwise earned?
  (Mr Oatway) Yes, my Lord, that is always a danger. However, I go back to say that we have to prove the loss at least beyond the realms of doubt. Otherwise, the Promoter or Network Rail, whom we normally claim these things from, require to see such evidence.

  10006. MR GEORGE: Mr Oatway, can I take that one degree further and could we please put up EWS31. Assume that the speed restriction or the weight restriction has lasted for six months and two weeks, then, if you were able to prove a loss, it would be a network change and, provided you could prove your loss, you would be entitled to claim. Is that not right?
  (Mr Oatway) Yes, that is correct.

  10007. And the point which is being put to you by Lord James is right, that, if you were to cheat, as it were, and it was not a real loss, then you would be getting away with it, but that would depend upon your making a claim which was a fraudulent claim and the onus would be on you in every case to show that, as a result of that speed restriction which had lasted for six months and two weeks, you had suffered a loss, and it would be perfectly open to others to say that there simply was not the market there and you could not possibly have run the train and so forth, in which case you would not be entitled to your compensation.
  (Mr Oatway) That is correct, yes.

  10008. LORD JAMES OF BLACKHEATH: How would that be observed and seen if anybody could intervene to make that counterclaim against the claim?

  10009. MR GEORGE: My Lord, the point I am making is that this arises under the whole way in which the network change provision applies. If your Lordship is right, that there is a fundamental deficiency and the whole scheme gives rise to fraudulence, then that would be reason for not allowing a claim when it was for more than six months or not allowing claims wherever there is a network change. For instance, where there are new points put in and so forth, there is a system which depends, in the case of disputes, on a determination procedure precisely to determine that matter. All we are saying is that the six-month cut-off is inappropriate rather than, as your Lordship is doing rather more fundamentally, saying that there may be a fallacy in the whole system.

  10010. LORD JAMES OF BLACKHEATH: I think the issue for me is just what exactly is the oversight of scrutiny which is applied to the claims?

  10011. MR GEORGE: Mr Oatway would be the person to answer your Lordship on that.
  (Mr Oatway) Yes, my Lord, in previous cases, and we have network changes going on all the time on the railway across the network, we have put in a claim to Network Rail which is wholly substantiated in terms of how much cost we have incurred, et cetera, et cetera. However, Network Rail does not just take our word for it. They look at how the trains have been operating up until the time of the disruption to form a view as to whether there is any problem with the claim. For example, if we had had problems with loading and then suddenly a network change came along and we thought, "Ah, we could probably get some money back here which we're not entitled to", of course we would never ever do that, but just supposing that we did do that, Network Rail would say, "Well, looking at the trains that were operating on the days before that, you already had these problems, therefore, those problems pre-existed the disruption and, therefore, we are not paying".

  10012. CHAIRMAN: Mr George, do you have a lot more questions?

  10013. MR GEORGE: I have no further questions at all.

  10014. CHAIRMAN: In that case, this would be a very suitable moment for a ten-minute break.

After a short break

  10015. CHAIRMAN: Mr George, this evidence has taken me slightly by surprise because, although paragraph 14 of your Petition does in fact, I think, technically raise this point, there is nothing in the response document which deals with it at all, so I have no idea what the Promoter's position is on what you are now asking for. At least I think I am correct in saying that.

  10016. MR GEORGE: You may be told that, my Lord, but it does not take the Promoter by any form of surprise because, as I indicated to, I think it was, Lord Brooke yesterday afternoon, before the House of Commons we pursued a point on G5 in which we succeeded and the undertaking was given.

  10017. CHAIRMAN: It may not take the Promoter by surprise, but it did take us by surprise and we have got to get our heads round it. So far as I am concerned, I read these things and it has taken me by surprise. I did not know anything about this at all. Never mind, go on. We will get to the bottom of it. Mr Taylor?

Cross-examined by MR TAYLOR

  10018. MR TAYLOR: Mr Oatway, just to begin with some questions about the evidence you gave relating to EWS's access option, I think you said that the access option that EWS holds for the majority of its paths will expire in, I think you said, 2015. Is that right?

  (Mr Oatway) By December 2015, that is correct, yes. It is an access contract rather than an option.

  10019. Sorry, I am using the wrong phrase. So the access contract that you currently hold to be able to operate trains on the network for the majority of your paths expires before Crossrail opens?
  (Mr Oatway) That is correct.

18   Committee Ref: A57, Non-compensatable disruption losses (LINEWD-103_05A-024) Back

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