Examination of Witnesses (Questions 10000
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
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.
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
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
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
(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
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
10012. CHAIRMAN: Mr George, do you have
a lot more questions?
10013. MR GEORGE: I have no further questions
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
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
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
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
(Mr Oatway) That is correct.
18 Committee Ref: A57, Non-compensatable disruption
losses (LINEWD-103_05A-024) Back