Diamond Bus Ltd v Transport for West Midlands
| Jurisdiction | England & Wales |
| Judge | Cawson |
| Judgment Date | 18 August 2023 |
| Neutral Citation | [2023] EWHC 2099 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CC-2023-MAN-000031 |
[2023] EWHC 2099 (Comm)
HHJ Cawson KC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: CC-2023-MAN-000031
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
CIRCUIT COMMERCIAL COURT (KBD)
Manchester Civil Justice Centre
1 Bridge Street West,
Manchester M60 9DJ
Stephen Connolly (instructed by Backhouse Jones) for the Applicant
Giles Maynard-Connor KC (instructed by Addleshaw Goddard LLP) for the Respondent
Hearing date: 27 July 2023
Approved Judgment
Remote hand-down: This judgment was handed down remotely at 10.30 am on Friday 18 August 2023 by circulation to the parties or their representatives by email and by release to The National Archives.
HHJ Cawson KC
HHJ Cawson KC:
Contents
| Introduction | 1 |
| Evidence | 8 |
| The Statutory and Regulatory Framework | 10 |
| Diamond's claim for reimbursement | 17 |
| The documents and data sought | 28 |
| CPR 31.16 — Disclosure before proceedings start | 32 |
| Diamond's case as to the application of CPR 31.16 | 36 |
| Jurisdictional Threshold | 36 |
| Discretion | 41 |
| TfWM's response to the Application | 52 |
| Preliminary considerations | 52 |
| Jurisdictional Thresholds | 55 |
| Discretion | 63 |
| Conclusion | 79 |
| Determination | 80 |
| Introduction | 80 |
| Jurisdictional Threshold | 83 |
| Discretion | 103 |
| Overall conclusion | 132 |
Introduction
By its application dated 24 April 2023 (“ the Application”), the Applicant, Diamond Bus Limited (“ Diamond”), seeks an order for pre-action disclosure pursuant to CPR 31.16 against Transport For West Midlands (“ TfWM”).
Diamond is a bus operator which provides bus services to the general public in and around the West Midlands comprising the administrative areas of Birmingham City Council, Coventry City Council, Wolverhampton City Council and the Metropolitan Districts of Dudley, Sandwell, Solihull and Walsall (“ the Principal Area”).
TfWM is part of the West Midlands Combined Authority and is responsible for the making, implementation and operation of travel concession reimbursement arrangements for the Principal Area under the Transport Act 1985 (“ the 1985 Act”) and the Transport Act 2000 (“ the 2000 Act”) (collectively “ the Acts”) and the Travel Concession Schemes Regulations 1986/77 (“ the 1986 Regulations”) and the Mandatory Travel Concession (England) Regulations 2011/1121 (“ the 2011 Regulations”) (collectively “ the Regulations”).
Diamond and TfWM have been in dispute for a number of years over sums which Diamond claims should have been reimbursed to it in respect of the provision by it of concessionary services for the periods 1 April 2018 to 31 March 2019, and 1 April 2019 to 31 March 2020. The sums in question fall into two categories, namely:
i) Additional costs that Diamond alleges that it incurred in the provision of concessionary services that Diamond alleges fall to be reimbursed (“ the Additional Costs Claim”); and
ii) Fare income that Diamond alleges that it has foregone by reason of its provision of concessionary services that Diamond alleges falls to be reimbursed (“ the Fares Foregone Claim”).
The Application is brought in anticipation of proceedings by Diamond against TfWM to recover the sums the subject matter of the Fares Foregone Claim. Diamond maintains that the jurisdictional thresholds under CPR 31.16 are satisfied, and that the Court ought, in the exercise of its discretion, to make an order for pre-action disclosure in the terms sought.
The Application is opposed by TfWM, whose case is that the jurisdictional thresholds under CPR 31.16 are not satisfied on the facts of the present case, and that the Court ought not, in any event, to exercise its discretion in favour of making an order for pre-action disclosure.
Stephen Connolly of Counsel appeared on behalf of Diamond, and Giles Maynard-Connor KC appeared on behalf of TfWM. I am grateful to them both for their very helpful written and oral submissions.
Evidence
The Application is supported by two witness statements, dated respectively 28 April 2023 and 9 June 2023, of Simon Lee Dunn (“ Mr Dunn”), a director of Diamond (“ Dunn 1”) and (“ Dunn 2”). In addition, Diamond relies upon the witness statement of Andrew Meaney (“ Mr Meaney”) of Oxera Consulting LLP (“ Oxera”), an economics and finance consultant, dated 26 April 2023, and the witness statement of Philip Timothy Lashford (“ Mr Lashford”) of Phinancial Consulting Limited, an expert in concessionary fare reimbursement, dated 26 April 2023.
TfWM relies upon the witness statement of Matthew Lewis (“ Mr Lewis”), a Technical Director responsible for Swift at TfWM.
The Statutory and Regulatory Framework
By section 93 of the 1985 Act and section 149 of the 2000 Act, TfWM was obliged:
i) To reimburse Diamond for free or subsidised bus travel that it provided to eligible passengers; and
ii) Subject to any regulations made by the Secretary of State, to formulate arrangements for such reimbursement.
By paragraph 4 of the 1986 Regulations and paragraph 6 of the 2011 Regulations, TfWM was required to have as its objective in formulating such arrangements that the providers of free or subsidised bus travel to eligible passengers (such as Diamond) were “no better or worse off” from providing such free or subsidised bus travel and that they were reimbursed for the costs incurred in so doing.
The arrangements that TfWM formulated that are relevant for present purposes are:
i) Transport Act 1985, Older and Disabled Persons Travel (Bus) Concession Scheme (“ the 1985 Act Arrangements”); and
ii) Transport Act 2000, Travel Concession Reimbursement Arrangements (“ the 2000 Act Arrangements”);
(collectively “ the Arrangements”).
There are two sets of the Arrangements, one valid from 1 April 2018 and the other valid from 1 April 2019. They are in similar form, and so for the purposes of the Application it is sufficient to work from just one of the Arrangements, namely those from 1 April 2018.
In outline, the Arrangements were a scheme promulgated by TfWM pursuant to which bus operators, such as Diamond, obtained reimbursement from TfWM for free or subsidised bus travel (i.e., concessionary fares) which pursuant to, inter alia, the Acts and the Regulations, they were obliged to provide to certain categories older (persons of pensionable age) and disabled passengers in the Principal Area.
The provisions of the Arrangements of particular relevance for present purposes are the following:
i) By paragraphs 8 of the 1985 Act Arrangements and paragraph 9 of the 2000 Act Arrangements, Diamond was required to provide, and did provide, travel concessions to eligible passengers as set out in Schedule 1 to the 2000 Act Arrangements on the eligible services that it operated.
ii) By paragraph 2 of the 1985 Act Arrangements and paragraphs 2 and 3 of the 2000 Act Arrangements, TfWM was obliged to reimburse Diamond for the provision of those travel concessions in accordance with the terms of the Arrangements.
iii) Paragraph 15 of the 1985 Act Arrangements provided that the objective of the Arrangements in relation to the reimbursement of operators under the 1985 Act was: “to provide such that operators both individually and collectively are no better and no worse off financially than they would be if they did not participate in the [Arrangements] in accordance with the principles set out in the [Regulations]”, subject to TFWM not being liable for any failure to achieve such objective.
iv) Paragraph 16 of the 2000 Act Arrangements provided that:
“The standard method for assessing the total number of journeys made by eligible persons under the Arrangements is set out in Schedule 2. The standard method for assessing the fares value to be attributed to those journeys is set out in Schedule 3. The standard method for calculating the reimbursement for revenue forgone due to the operator will be on the basis of the formula and parameters set out in Schedule 4. The standard method for calculating any costs additional to basic operating costs is set out in Schedule 6.”
v) Paragraph 17 of the 2000 Act Arrangements then provided that:
“In calculating the reimbursement due to the operator, the Authority will take into account any data supplied by the operator if it can be shown that the data supplied is more accurate than the standard method and is more likely to enable the Authority to meet the applicable, ‘no better, no worse’ objectives for reimbursement set out in the [Regulations] and EU Regulation 1370/2007.”
vi) Schedule 3 to the 2000 Act Arrangements sets out the “standard method” of determining the average fare that would be paid in the absence of the concession. This involves determining the “Average Cash Fare”, i.e., what passengers would have paid in cash for each journey, and to then apply a “Discount Factor”, the principal determinants of which are the relative prices of cash fares, daily tickets and weekly tickets as described in Department of Transport guidance (“ DfT Guidance”). Operators are required to provide four specified values of data with regard to cash fares, daily tickets and weekly tickets to be used to estimate the average cash fare paid by commercial passengers for each journey, and the average price per ticket of daily and weekly tickets respectively (paragraph 4 of Schedule 3). Paragraph 5.1 of Schedule 3 then provides that the four values are to be input into a spreadsheet which draws on the data included in the DfT model or other local data if more applicable ( “the Look-up table”) to populate a DfT Discount Factor calculation. Paragraph 5.1 provides that the specific values in the Look-up table are locally derived from all smart card concessionary journeys originating in the...
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