R (London & Continental Stations & Property Ltd) v Rail Regulator
| Jurisdiction | England & Wales |
| Judge | Mr Justice Moses |
| Judgment Date | 07 November 2003 |
| Neutral Citation | [2003] EWHC 2607 (Admin) |
| Docket Number | Case No: CO/2064/2003 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 07 November 2003 |
[2003] EWHC 2607 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand,
London, WC2A 2LL
THE HONOURABLE MR JUSTICE MOSES
Case No: CO/2064/2003
On The Application of
Mr John Howell QC and Mr Gerard Clarke (instructed by Herbert Smith) for the Claimant
Mr John Cavanagh QC and Mr Paul Nicholls (instructed by Norton Rose) for the Defendant
Mr Andrew Hunter (instructed by Edwards Geldard) for the Interested Party
Introduction
St Pancras station is being redeveloped to create a terminus for international trains using the Channel Tunnel Rail Link ("CTRL") as well as for domestic services to Kent and the East Midlands. The claimant is the property subsidiary of London and Continental Railways Ltd. That company contracted with the Secretary of State for Transport to design, build and finance and operate the CTRL pursuant to powers under the Channel Tunnel Rail Link Act 1996.
London & Continental Stations & Property Ltd ("LCSP") owns and manages St Pancras station and is the "facilities owner" of St Pancras station for the purposes of the Railways Act 1993 ("the 1993 Act"). The defendant is the statutory regulator of the railway industry, appointed under the 1993 Act. The first interested party, Midland Main Line Ltd ("MML") is the train operating company, operating passenger services to and from St Pancras station, serving destinations in the East Midlands. The second interested party, the Strategic Rail Authority ("the SRA") is the statutory authority responsible for setting strategies for the development of the rail network, established under the Transport Act 2000. It has taken no part in these proceedings.
In these proceedings LCSP seek to impugn a direction given by the Rail Regulator on 11 th April 2003 pursuant to Section 17 of the 1993 Act. That direction requires LCSP to enter into a station access contract with MML. The station access contract contains provisions for calculating compensation due to MML for damage to its business flowing from disruption and alteration to MML's access to St Pancras during the CTRL construction work. LCSP challenge the legality of the Rail Regulator's decisions as to the appropriate method for calculating compensation.
Facts
As owner of St Pancras station LCSP ("the facility owner") may only enter into an access contract allowing another party to use its station in accordance with directions given by the Rail Regulator under Section 17 or 18 of the 1993 Act. Any contract granting MML access to station facilities at St Pancras station has to be made in accordance with directions of the Regulator.
On 19 th April 1996, the British Railways Board, the owner of St Pancras station at that time, entered into a Station Access Agreement with MML granting MML permission to use St Pancras station ("the 1996 Access Agreement"). The 1996 Access Agreement set out the facilities to be made available for MML's passengers and staff such as public toilets, ticket machines, signs and access to platforms and forecourts. I shall turn to the terms of the 1996 agreement later but it is worth noting, at this stage, that negotiation of the 1996 agreement was a long drawn-out process which finally led to agreement and subsequent approval by the Regulator pursuant to Section 18 of the 1993 Act. The 1996 Station Access Agreement was due to expire on 28 th April 2003 by which time it was expected that CTRL works would have been completed.
On 28 th April 1996 MML was granted a franchise to provide train services into St Pancras. That franchise was due to expire on 30 th April 200On 31 st May 1996 the interest of the British Railways Board in St Pancras and in the 1996 Access Agreement was transferred to LCSP.
The CTRL works will involve disruption and alteration to MML's access to St Pancras. MML's services will be operated from three locations during the works, firstly in its current location (the Barlow Shed), and in an interim station north east of St Pancras which will be used by MML and Thameslink between 2004 and 2006. When the CTRL works are completed it will form part of the extended St Pancras International Station and it will be used for the new Kent Express domestic services. The third location, the final station, will provide new station facilities in the redeveloped St Pancras. It will be used by MML for some twelve months before completion of the CTRL works.
On 2 nd August 2000 MML's franchise was extended to April 200Construction did not start until the following year, in August 2001, when the short term car park was closed triggering the first payment of compensation under the 1996 Access Agreement. The first real project works started on 5 th August 2002 with the closure of two platforms. It is intended that MML should move to the interim station in 2004. The construction work is expected to finish late in 2006 or early 2007. Thus, the compensation regime under the 1996 Access Agreement, expected to provide MML with compensation during the whole of the CTRL work, will not be able to achieve that objective because of delay in starting and completing the project.
Accordingly, negotiations took place between LCSP and MML during the course of 2002. The parties were unable to agree terms of compensation. LCSP took the view that the amounts payable under the 1996 Access Agreement had been greater than any actual or potential losses to MML's business. It sought a reduction of the amounts of compensation payable. MML sought to maintain the level of compensation.
Since the parties were unable to agree, on 15 th October 2002 MML applied to the Regulator pursuant to Section 17 of the 1993 Act for directions requiring LCSP to enter into a Station Access Agreement on the terms which MML advanced. On 16 th October 2002 the Regulator notified LCSP of the Section 17 application and invited it to respond. On 6 th November 2002 LCSP gave a detailed reply to points raised by MML. In December 2002 MML responded and further correspondence took place.
The Regulator commissioned MVA, a firm of consultants on transport economics, to advise on the appropriate compensation arrangements and levels. The terms of reference had been agreed in November 2002 with LCSP. A first draft report was forwarded to LCSP and MML on 23 rd December 2002, requesting comments by 8 th January 2003. LCSP commented upon that draft on 13 th January 2003 with the aid of advice from Mr Geoffrey Maynard who is a transport consultant. LCSP also received MML's comments.
On 24 th January 2003 the Regulator permitted a full day's hearing, of which I was provided a transcript, at which representatives of the parties were given the opportunity to make representations. MVA set out the methodology it had recommended for the calculation of compensation. LCSP challenged that methodology. On 31 st January 2003 LCSP wrote listing various concerns in relation to the detail of the approach adopted by MVA.
MVA's final report was provided to the Regulator on 4 th February 2003 and subsequently forwarded to LCSP and MML on 19 th March 2003 accompanied by the Regulator's draft directions. LCSP again responded on 21 st March 2003 and submitted written comments on 26 th March 2003.
On 11 th April 2003 the Regulator issued his directions enclosing the new Station Access Agreement. His reasoning is set out in the document dated April 2003.
Statutory Scheme
As I have said, Sections 17 and 18 of the 1993 Act create a system which confers power on the Regulator to direct an owner of railway facilities to enter into an access contract to allow another party to use its facilities. Alternatively he may approve an access contract, the terms of which have been agreed between the facility owner and the other party, as occurred in relation to the 1996 agreement. Pursuant to Section 18(1), the facility owner may only enter into an access contract if directed to do so by the Regulator under Section 17, or if it agrees the terms of access with the other party and the Regulator approves those terms and issues directions under Section 18. The relevant provisions of Sections 17 and 18 are set out in Annex 1 to this judgment.
It should be noted that by virtue of the operation of Section 22(1) any amendment or purported amendment of an access contract is itself void unless it falls within the provisions of Section 18(1)(a)-(c), that is, made pursuant to directions given by the Regulator, made under the terms of an approved contract or is the subject of a general approval. The effect of the provisions of Sections17 and 18 is that the Regulator may determine to whom the owner of the railway station may permit access and on what terms.
Schedule 4 of the 1993 Act governs the procedure for determining applications for directions. By paragraph 3 of Schedule 4 the Regulator is required to give an opportunity to the facility owner to respond to an application. The applicant is to be given an opportunity to make further representations in response. It can be seen that the opportunity in the instant case afforded to LCSP and MML to make representations was far greater than that required under the statute.
Subject to an overriding duty to exercise his functions in such a manner as not to impede the performance of any development agreement under the Channel Tunnel Rail Link Act 1996 (see Sections 21(1) and 56), the Regulator must exercise his functions in a manner which he considers best calculated to achieve certain objectives...
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